Blockchain Security 101: 3 Ways Developers Can Enhance Security Blockchain dApps
In the technology world, blockchain has been a major driver of growth and innovation, but this doesn't leave it without vulnerabilities, one of which is security. Being a sophisticated technology, blockchain resolves some of the bottlenecks experienced in old tech. However, it also opens the space up to sophisticated attacks from hackers who rely on blockchain's transparency and decentralization to snoop around for loopholes in the system infrastructure to launch attacks.
Recently, one of the largest exchanges in the blockchain space, Bybit, was hacked, and the hacker took away approximately 401,347 Ether. The reoccurrence of thefts and system breaches raises user concerns, leaving developers with the ultimate question of how to improve security for blockchain applications.
What is Blockchain Security?
To explain it succinctly, blockchain security is all about keeping blockchain transactions, protocols, and data safe and resistant to attacks.
Undoubtedly, blockchain has improved our ways of interacting with the world, from borderless and swift financial transactions to ownership of digital assets and application development. This growing adoption requires adequate protection, and this is why learning how to improve blockchain security is vital for both developers and users.
The truth is no system is entirely breach-resistant; however, developers can follow a streamlined way to improve security using practical security tools designed for blockchain. For this, developers should focus on these three things:
1. Access Control
Blockchain is inherently secured, given its decentralized and cryptographic mechanism, but attacks do not occur solely because of external access. In reality, blockchain protocols are still prone to risks from unauthorized access, key thefts, and insider tampering with codes or smart contracts. Hence, developers must employ effective access control to prevent insider threats and enhance key management.
Access control is a fundamental security measure used in cyberspace to keep a system secure by regulating who can interact with the system. By preventing unauthorized access, developers can quickly secure transactions and ensure the integrity of decentralized applications (dApps), smart contracts, and blockchain networks.
Mechanisms for Access Control
a. Key Management
- Use hardware wallets for private key storage.
- Implement multi-factor authentication (MFA).
- Utilize threshold cryptography, where a key is split into multiple parts.
b. Smart Contract Access Control
- Define which users can execute certain smart contract functions.
- Use code structures that limit access (e.g., only owner in Solidity).
- Set conditions such as vesting periods before users can access funds.
c. Node Authentication and Network Access
- Define which nodes can validate transactions in Proof-of-Stake (PoS) or Delegated Proof-of-Stake (DPoS) networks.
- Restrict access to blockchain nodes to trusted sources only using firewall and IP Whitelisting
d. Privacy
Using infrastructure like zero-knowledge proof, dapps can allow users to prove they have access without revealing sensitive information. For instance, the asset owner proves ownership without exposing the wallet balance.
2. Smart Contract Audit
A smart contract is a self-executory contract or code designed to facilitate the automatic execution of transactions on the blockchain. To eliminate centralization or reduce intermediation, blockchain needs smart contracts; however, smart contracts are human-written codes; hence, they are vulnerable to error. Additionally, the transparent nature of blockchain makes this infrastructure readily accessible, giving bad actors the chance to discern loopholes in the codes and exploit them. Developers of blockchain-chain-based applications are left with the duty of ensuring that the smart contract is safe at all points, and this can be achieved through routine audits.
Smart contract auditing is a practical code reviewing mechanism used by developers to highlight vulnerable areas, detect outdated and easily exploitable codes, and remedy them before a hacker exploits them.
While developers can set up a smart contract auditing team internally, the most cost-effective way is to opt for the service from leading smart contract auditing companies like ConsenSys Diligence and Hacken.
How to conduct smart contract auditing
a. Requirements Gathering
This is an overview stage where the auditing company or team examines the ecosystem to understand the purpose of the embedded smart contract, its functionalities, intended users, and potential risks associated with its deployment.
b. Code Review
Thoroughly examine the smart contract code line by line to identify vulnerabilities, such as logic errors, reentrancy issues, or potential gas optimization opportunities.
c. Security Analysis
Perform static analysis to detect common vulnerabilities like integer overflow, underflow, or unauthorized access control. Dynamic analysis may also be used to simulate various scenarios and interactions.
d. Testing
Using automated tools and scripts, the team runs tests that check for known vulnerabilities or errors in the code. Additionally, manual testing is conducted to validate the smart contract behavior against the specified requirements and to identify any overlooked issues that automated tools may miss.
e. Risk Assessment
Evaluate the severity of identified vulnerabilities based on their potential impact and likelihood of exploitation.
f. Final Report
Prepare detailed documentation summarizing the audit findings, including identified vulnerabilities, their risk levels, and actionable recommendations that are required to implement necessary improvement.
3. Penetration Testing
Everyone agrees that the only way to determine the security strength of a system validly is by testing it. As a developer, understanding that your project cannot be considered secure until it is safe is essential to ensuring security.
The penetrating test allows you to launch a self-orchestrated attack against your system to identify weaknesses in the blockchain network or application. This can be a self-orchestrated attack or a bounty, allowing hackers to test system security strength for reward.
By testing the system's defenses and reviewing codes, developers can proactively develop appropriate security measures to fix vulnerabilities before they are exploited.
How to conduct a penetration test
a. Planning and information gathering
To conduct a penetration test, developers start by appointing a team of experts to define the goals and scopes of the penetration. At this stage, necessary permission is granted to the team to conduct the test without disrupting the regular activity. The penetration team commences operation by gathering information about the target system, network, or application. At this stage, effort is put into identifying potential points of entry for attacks.
b. Vulnerability Analysis
Using automated tools like Nmap, Nessus, and OpenVAS, the team will carefully scan the blockchain infrastructure to identify system vulnerabilities and security gaps. Aside from automated tools, manual processes can also be adopted to ensure that the team exhaustively examines the scope and goals of the test as defined in step 1. Once detected, vulnerabilities are prioritized based on their severity and potential impact.
c. System Exploitation
This is where a self-orchestrated attack is launched in the system as an attempt to exploit the system. This exploitation is designed to achieve different vulnerability purposes like gaining authorized access, extracting sensitive information,
d. Reporting
Finally, the team prepared a post-exploitation report to declare the extent of compromise and the system's security strength. The report also includes recommendations on how to mitigate identified risks, allowing developers to implement effective and efficient security measures.
Conclusion
Security is fundamental to every protocols in the blockchain because the technology offers an anonymity effect that renders transaction traceless. This implies that transaction cannot be easily traced an individual, hence, theft often go unpunished. The truth is while it may be impossible to keep bad actors off the radar, we can prevent them from exploiting the system. Beyond controlling access, auditing smart contracts, and conducting penetration tests, developers must ensure that other blockchain components and infrastructures are effectively secured.