Most Popular Blockchain Security Issues and Possible Attacks

Blockchain technology is surging in popularity, showing no signs of a slowdown. It’s becoming more mainstream, featuring applications across multiple industries.

The initial intent of blockchain was to provide a tamper-proof transaction ledger that connects data blocks with digital cryptography. The technology has long proven effective for its most popular application—cryptocurrencies. It is now extensively used to facilitate smart contracts, money transfers, real estate transactions, sharing medical information, non-fungible tokens, and beyond.

Growth, however, doesn’t make the technology entirely immune to cyberattacks and fraud yet. While designed to be immutable, its infrastructure has vulnerabilities that are being manipulated, bringing about blockchain security issues.

It’s essential to have a basic understanding of blockchain infrastructure and identify common attacks to address the possible impact of these issues.

What is Blockchain?

While seemingly complicated, the process behind blockchain technology can be easily broken down and explained.

Put simply: it’s a sharable database that stores, duplicates, and distributes digital information.

As the name implies, blockchain has blocks (records of transactions) chained with each other using cryptography. In other words, these are the places where the information is stored and encrypted inside the blockchain.

There are multiple blocks in the chain, and with every new transaction, a new one is created and validated. The essential thing to know about blockchain privacy is that it's not subject to change after the data is stored in the blocks and mined or finalized.

Mining is the process of adding a new block to the chain. The term is mainly associated with Bitcoin. However, it’s also used for other technologies. Miners add a new Bitcoin transaction to the global public ledger of Bitcoin’s previous transactions during mining.

The reasons behind blockchain’s rampant popularity are actually security and trust. While a third party in charge can change other databases, blockchain is entirely automated; there's no one in charge—people who use it also run and control the system.

While having trust and safety at the core of the system, blockchain still has security vulnerabilities that are attractive targets for attackers. Although blockchain networks are extremely challenging, some hackers certainly don’t lack the motivation to find a loophole in the system. Thus, it’s essential to learn more about the possible attacks that can hit the blockchain infrastructure.

Common Blockchain Security Attacks and Issues

Given that the basic concepts behind blockchain technology are cryptography and decentralization that assure its immutability, it does seem safe and secure. One of the things that makes the system legitimate and trustworthy is the linear and chronological order of the blocks. This makes the alteration of a single block nearly impossible, as, in addition to its own hash, it also contains the hash of the previous block plus the time stamp mentioned previously.

On top of this, the technology also has several integrated security features in the form of identity controls, data protection, and software-mediated contracts. However, the flip side of the coin is that the system has some vulnerabilities that can cause blockchain technology problems.

Among the most widespread attacks that exploit those vulnerabilities are:

51% Attack

A 51% attack is most typical to Bitcoin, as it takes advantage of the mining process. A group of miners that take the majority control (more than 50%) of the network’s hash rate can hinder the process of creating new blocks.

It mostly happens in the case of conflicting transactions (two blocks mined simultaneously), when one of the blocks needs to be approved by the majority of the network to be kept in the chain. If the attackers manage to control the majority of the mining power, they can prevent the transaction and perform the attack. Gaining control allows them to reverse transactions, causing the double-spending of the coins.

Double-Spending Attacks

A double-spending attack implies using the same crypto more than once. It’s possible only if the attackers manage to mine and add a secret block preventing the creation of the real one (via a 51% attack). Although it’s hardly possible that the secret block can make its way into the blockchain, the hacker will be able to double-spend the coin if this happens.

Routing Attack

A routing attack can happen when hackers intercept data during the transfer. Given that blockchain requires a massive volume of data transactions and the whole process is done in real-time, attackers may use the opportunity. The attack can be performed anonymously without the network participants expecting it.

Data interception may result in the leak of confidential data and even monetary extraction in the case of cryptocurrencies.

While these are the most widespread attacks, there may be other problems with blockchain security brought about by such vulnerabilities as missing or stolen private keys or hacking shared databases.

A blockchain security audit shows that networks with more blocks are more secure and difficult to attack. This is because to corrupt a chain system, the attackers would need to change all the blocks in the chain across all the distributed versions. In this respect, Bitcoin and Ethereum blockchains are among the safest as they are constantly expanding and adding new blocks.

However safe a system may seem, cybersecurity should be a top priority when important data transfer is at stake.