Blockchains are less likely to be hacked than other systems since they are not centralized. For example,in order to launch a 51% attack, hackers or criminals need to control more than half of the computers that are part of the distributed ledger in order to change the chain (this is very unlikely, but not impossible).
However, there are still instances of blockchain networks being network, for example, Axie Infinity's Ethereum-based sidechain Ronin was hacked for $650m worth of ETH earlier this year.
This was due allegedly to an exploit regarding Sky Mavis being given access to sign off on transactions, a permission that was never provoked, which may have led to hackers discovering a way to take advantage of this access.
Another issue regarding blockchain technology is a lower level of security for private blockchain networks. Blockchain networks like Bitcoin and Ethereum are available to anyone with a computer and an internet connection. This means that anyone can access them (for example as a node on the network).
When the number of users on a blockchain network goes up, it doesn't cause a disaster. Instead, it makes the network safer. If there are more nodes involved, this means that there are more people looking at each other's work and finding people who are trying to do harm.
Because of this, private blockchain networks, which require an invitation to join, may be more open to attacks and manipulation than public blockchain networks, which don't need invitations.
Double spending is another security issue regarding blockchain networks. Whilst it's possible that blockchain technology may make it easier to thwart "double-spending" attacks on payments and money transfers, these attacks still pose a huge risk to the existence of blockchain-based cryptocurrencies.
A user is said to have engaged in "double spending" when they have spent their Bitcoins more than once. When dealing with currency, there is no indication of a problem. For example, if you purchased a coffee with the $3 you had in your wallet earlier, that money is no longer in your possession (it cannot be "double-spent"). It is possible to spend Bitcoin several times before it is brought to other people's attention by other users.
Using blockchain technology might prevent this from happening. First, the whole cryptocurrency network has to reach a consensus on the transaction sequence, confirm the most recent transaction, and then publish the information about that transaction on the blockchain in a public format.
The double spending problem was resolved when the first cryptocurrency, Bitcoin, was introduced. This serves as an illustration of how blockchain technology may assist preserve not just monetary assets but also papers. For example, a person who planned to spend the same Bitcoin twice by handing it to two other persons at the same time would first place the two transactions into a pool of unconfirmed transactions. This would allow the person to spend the Bitcoin twice without raising suspicion.
The confirmation of the original transaction would be the next block of data that would be added to the currency's transaction history. However, due to the fact that the second transaction was connected to a block that had already been added to the chain, it would not be possible for it to be included in the chain.
There is no way to stop cyber criminals from tampering with our 21st-century existence, but the systems we depend on must keep up with these ever-evolving threats. Even the blockchain isn't safe. Decentralized finance was rocked in March when $600 million in digital assets were stolen from the Ethereum-based Ronin Bridge.
Worst-case situations must be minimized as blockchain approaches institutional usage, such as the XDC Network in trade finance. Decentralized networks may be fast, efficient, and useful, but they can't sacrifice security in the process.
When it comes to blockchain security, there are networks out there that are tackling the issue of inherent security risks within blockchain networks.
Hashlabs released the XDPoS 2.0 protocol upgrade for the XDC Network, which aims to improve security and efficiency extensively. The beta release of XDPoS 2.0 consensus engine was announced on July 20th and could be a good solution for blockchain security.
The protocol has the following features:
- Byzantine security
- Secure even when 1/3 of the master nodes turn rogue
- Fast transaction finalization - Takes 3 blocks for transaction finalization
- Built-in Forensic monitoring - Attackers slashed with evidence, guaranteed
- Switch from 1.0 to 2.0 - Simple deployment, no change to accounts/wallets/Dapps
The protocol was developed over 10 months and tested continuously on the XDC dev-net and aims to improve the XDC network's security and speed. Xdc.dev is a blockchain developer forum that provides knowledge resources, tools, and advice for blockchain developers.
There are still certain worries despite the fact that the security of blockchain is supported by the very architecture of blockchain itself and that nodes around the globe frequently confirm it.
One of the pros of blockchain technology is that it makes it possible for transactions to be executed in an absolutely open and transparent way. As a direct consequence of this, a number of the more human-centered safeguards that have evolved over time have been rendered obsolete by this new technology.
Using this technology to ensure the integrity of assets has many benefits, but it is not concerned with who gave the information or who got it. Because of this flaw, criminals may quickly transfer stolen money using phishing, brute force, and social engineering attacks.