The Complete Guide to Blockchain Attacks
Despite common belief, decentralized systems are not tamper-proof, and they do have their weaknesses, as they too are susceptible to hacker attacks.
Although they are perceived as a safer alternative compared to centralized systems which are considerably less reliable, blockchains have their fair share of vulnerabilities that can be classified as “modern” breaches.
The Complete Guide to Blockchain Attacks
Crypto exchanges and terminals are certainly a challenge for modern hackers, but they are not invincible.
In fact, between January and June 2019, there have been a total of seven hacker attacks on such platforms, which led to the loss of millions of dollars.
Other statistics also support these claims. For example, between 2017 and 2018, $882 million were lost through these crypto exchanges. In other words, the problem with blockchain attacks is very real and poses a large threat for decentralized platform users.
There are several types of blockchain attacks, and we are going to look at the most popular types of attacks up closely.
Blockchain Network Attacks
Like any other network, the blockchain has vulnerabilities that allow hackers to exploit them.
Blockchain-based networks consist of nodes, which are devices essential to this technology. These nodes record, verify and process the data that goes through them.
Often, this is financial data that allows transactions to happen.
Hackers can exploit various vulnerabilities on these networks to conduct their blockchain network attacks, and, depending on the approach they take, there are several distinct types.
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The replay attack is quite simple, yet very harmful. The name explains the process behind it. The attackers trace particular transactions, entries, sometimes even messages, and afterward they repeat them.
By doing this, the attackers get ownership over data that can be quite valuable. A ‘helpful’ vulnerability for hackers to exploit in the replay attack can be unchanged information, such as an old password.
However, there are simple ways in which blockchains can protect their data from a replay attack.
Usually, all it takes is for the blockchain to implement timestamps and limit the number of allowed repeats for a transaction.
DoS And DDoS Attack
Denial-of-Service (DoS) and Distributed Denial-of-Service (DDoS), are considerably well-known hacker attacks, and although they are more common with traditional servers, they can pose a threat for blockchain technologies as well.
They work through targeting a particular server or client and overwhelming it with a large number of requests.
That way, the attackers create harmful traffic and stop other users from accessing the targeted server.
Although, in essence, both DoS and DDoS attacks are similar, the main difference between them is that the first one is done through a single source, while DDoS generates traffic from various places.
An Eclipse blockchain network attack happens when the hackers cripple a specific node on the network, instead of centering on the entire system.
They isolate the selected node, force it to restart, and redirect the links to faulty IP addresses.
If attackers get control over the more influential nodes, they can steal valuable data, seize mining power, and deduct further attacks.
Unlike the Eclipse attack on a specific node, the Sybil attack targets the entire blockchain.
The hackers will create many fake nodes to trick the victim, which will eventually lead to gaining full control over the blockchain network.
Think of it as creating a fake account on social media and deceiving someone.
With this, the attackers have a lot of advantages, and can even perform a 51% attack, an incredibly harmful blockchain attack that we will discuss later in the article.
Consensus Protocol Attacks
All blockchains use a protocol, whether it is PoW, PoS, etc. The Consensus Protocol attacks happen when hackers identify vulnerabilities in these algorithms, and they use them to attack the tools of transactions, registration, and confirmation of the users.
Double Spending Attack
This right here is a well-known type of attack, as it allows hackers to use the same crypto coins in various transactions.
The name says it all, really. In other words, a bad actor, for example, can use one Bitcoin to sell it to several people, and gain money from them, but will send that coin to only one of them, or worst-case scenario to none of them.
There are various examples of the double-spending attack, but they all come down to the same thing. It’s a vulnerability exploited by hackers to make profits through fake transactions.
We already mentioned the 51% attack before, and now we are going to explain it. Particularly, this consensus protocol attack is one of the most notorious blockchain attacks, particularly in the crypto sphere.
A blockchain consists of a large number of nodes, and it requires a considerable amount of energy, therefore electricity cost, making it almost impossible for someone to have control over the network.
This is one of the biggest advantages in decentralized networks. However, it is not impossible to gain control over more than half the system’s hash rate.
Once this happens, it allows the holder of these 51% to execute and modify data without depending on other participants. In other words, one can steal data, reverse transactions, etc.
There are recorded cases of the 51% attack happening to Verge and Bitcoin Gold, etc.
Nevertheless, it’s not something easy to do and usually, it takes a lot of energy, which can prove to be unprofitable.
Crypto Wallet Attacks
The main goal of these attacks is to access cryptocurrencies from the users’ crypto wallets. Therefore, there are two distinctive attacks:
Hot wallets are easy to break. Considering that they are connected and depend on the Internet, all it takes is for a hacker to use phishing tactics, or other forms of attacks to access your keys and PINs.
Although they are safer than hot wallets, cold wallets are not entirely protected either. As a matter of fact, with the proper knowledge, an attacker can infect your cold wallet with malware and steal your stored coins.
Smart Contract Attacks
Smart contracts are a digital protocol which serves as a more advanced form of contract that allows the performance of credible transactions without third parties. However, considering that it’s made from code, a similarity with traditional software, it means that it can have its own vulnerabilities.
The machines that execute these smart contracts can be breached, therefore leading to the so-called Smart Contract Blockchain attack.
Precautionary Measures to Consider Taking
There isn’t a one-fits-all type of solution when it comes to blockchain attacks, but you can go through some simple precautionary measures in order to gain an extra layer of protection against bad actors.
For example, you can consider the following:
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