The last few years have seen blockchain platforms becoming the centerpiece of many tech conversations across the globe. This is because the technology not only lies at the heart of almost all cryptocurrencies in existence today but also supports a range of independent applications. In this regard, it should be noted that the use of blockchain has permeated into a host of novel sectors, including banking, finance, supply chain management, healthcare and gaming, among many others.
As a result of this growing popularity, discussions pertaining to blockchain audits have increased considerably, and rightly so. While blockchains allow for decentralized peer-to-peer transactions between individuals and companies, they are not immune to issues of hacking and third-party infiltration.
Just a few months ago, miscreants were able to breach gaming-focused blockchain platform the Ronin Network, eventually making their way with over $600 million. Similarly, late last year, blockchain-based platform Poly Network fell victim to a hacking ploy that resulted in the ecosystem losing over $600 million worth of user assets.
There are several common security issues associated with current blockchain networks.
Blockchain’s existing security conundrum
Even though blockchain tech is known for its high level of security and privacy, there have been quite a few cases where networks have contained loopholes and vulnerabilities related to insecure integrations and interactions with third-party applications and servers.
Similarly, certain blockchains have also been found to suffer from functional issues, including vulnerabilities in their native smart contracts. To this point, sometimes smart contracts — pieces of self-executing code that run automatically when certain predefined conditions are satisfied — feature certain mistakes that make the platform vulnerable to hackers.
Recent: Bitcoin and the banking system: Slammed doors and legacy flaws
Lastly, some platforms have applications running on them that haven’t undergone the necessary security assessments, making them potential points of failure that can compromise the security of the entire network at a later stage. Despite these glaring issues, many blockchain systems have yet to undergo a major security check or independent security audit.
How are blockchain security audits conducted?
Even though several automated audit protocols have emerged in the market in recent years, they are nowhere as efficient as security experts manually using the tools at their disposal in order to conduct a detailed audit of a blockchain network.
Blockchain code audits run in a highly systematic fashion, such that each and every line of code contained in the system’s smart contracts can be duly verified and tested using a static code analysis program. Listed below are the key steps associated with the blockchain audit process.
Establish the goal of the audit
There’s nothing worse than an ill-advised blockchain security audit since it can not only lead to a lot of confusion regarding the project’s inner workings but also be time and resource exhaustive. Therefore, to avoid being stuck with a lack of clear direction, it is best if companies clearly outline what they may be looking to achieve through their audit.
As the name quite clearly implies, a security audit is meant to identify the key risks potentially affecting a system, network or tech stack. During this step of the process, developers usually narrow down their goals as to specificy which area of their platform they would like to assess with the most amount of stringency.
Not only that, it is best for the auditor as well as the company in question to outline a clear plan of action that needs to be followed during the entirety of the operation. This can help prevent the security assessment from going astray and the best possible outcome emerging from the process.
Identify the key components of the blockchain ecosystem
Once the core objectives of the audit have been set in stone, the next step is usually to identify the key components of the blockchain as well as its various data flow channels. During this phase, audit teams thoroughly analyze the platform’s native tech architecture and its associated use cases.
When partaking in any smart contract analysis, auditors first analyze the system’s current source code version so as to ensure a high degree of transparency during the latter stages of the audit trail. This step also allows analysts to distinguish between the different versions of code that have already been audited as compared to any new changes that may have been made to it since the commencement of the process.
Isolate key issues
It is no secret that blockchain networks consist of nodes and application programming interfaces (APIs) connected to one another using private and public networks. Since these entities are responsible for carrying out data relays and other core transactions within the network, auditors tend to study them in great detail, carrying out a variety of tests to ensure that there are no digital leaks present anywhere in their respective frameworks.
Threat modeling
One of the most important aspects of a thorough blockchain security assessment is threat modeling. In its most basic sense, threat modeling allows for potential problems — such as data spoofing and data tampering — to be unearthed more easily and precisely. It can also help in the isolation of any potential denial-of-service attacks while also exposing any chances of data manipulation that may exist.
Resolve of the issues in question
Once a thorough breakdown of all the potential threats related to a particular blockchain network has been completed, the auditors usually employ certain white hat (a la ethical) hacking techniques to exploit the exposed vulnerabilities. This is done in order to assess their severity and potential long-term impacts on the system. Lastly, the auditors suggest remediation measures that can be employed by developers to better secure their systems from any potential threats.
Blockchain audits are a must in today’s economic climate
As mentioned previously, most blockchain audits start by analyzing the platform’s basic architecture so as to identify and eliminate probable security breaches from the initial design itself. Following this, a review of the technology in play and its governance framework is carried out. Lastly, the auditors seek to identify issues related to smart contacts and apps and study the blockchain’s associated APIs and SDKs. Once all of these steps are concluded, a security rating is handed out to the company, signaling its market readiness.
Recent: How blockchain technology is changing the way people invest
Blockchain security audits are of great importance to any project since it helps identify and weed out any security loopholes and unpatched vulnerabilities that may come to haunt the project at a later stage in its lifecycle.
