Although cryptocurrencies have existed for decades, their value has grown dramatically in recent years. Consequently, the payment industry has also witnessed a paradigm shift. The crypto-assets are here to stay. They have progressed from being unconventional investments to becoming an integral part of the international payment system. A survey report from the U.S. State of Cybercrime claimed that the intensity and impact of cybersecurity breaches have considerably been more significant than before despite the slowdown in the recorded number of violations.

Today’s cyberattacks are well planned and sophisticated than in the past. However, even though organizations are generally aware of cybersecurity and cyberattacks, they still fall short of preventing those attacks targeted at the Blockchain system. In addition, the vulnerability of the Software Development Lifecycle (SDLC) increases with constant integration and deployment of products and applications.

The absence of a central authority in a decentralized architectural system adversely affects the execution and setup of system security policies and business contingencies. As a replacement for providing additional security protection for the system, the Blockchain system utilizes the existing security features of the Blockchain technology.

The PolyNetwork financial security breach is said to be the largest to date. The hackers stole crypto assets worth more than $600 million by exploiting the Poly Network on DeFi exchanges Ethereum, Binance Smart Chain, and Polygon.

Various Crypto Vulnerabilities and Risk Management

The lack of awareness in different organizations and the misconception regarding threat vulnerability are among other factors that make small and medium-sized businesses susceptible to cyber attacks. Furthermore, with cryptocurrencies and crypto-assets becoming a part of organizations, prioritizing risk management is very crucial. Therefore, let’s explore some of the vulnerabilities of the Blockchain and how cybercriminals can exploit them:

Blockchain network attacks

Hackers look for network vulnerabilities and exploit them with Distributed Denial of service attacks (DDoS), transaction malleability attacks, Sybil attacks, routing attacks, eclipse attacks, and long-range attacks targeting networks using the PoS consensus algorithm. Apart from this, hackers can exploit the cryptocurrency timestamp handling and alter the network time counter of the node, thereby forcing it to accept an alternative Blockchain.

User-wallet attacks

The credentials to the wallet of Blockchain users are a favorite target of cybercriminals. They use methods like phishing, flawed key generation, hot and cold wallet attacks, and dictionary attacks to get user credentials. Hackers can also exploit vulnerable user signatures that Blockchain networks create using various cryptographic algorithms.

Transaction verification attack

The Blockchain only confirms transactions when all nodes are in agreement. This time-consuming verification process becomes a vulnerability for cyberattacks. Some attacks that exploit the transaction verification vulnerability are double-spending attacks, 51% attacks, race attacks, Finney attacks, and Vector76 attacks. The 51% attack on Ethereum Classic (ETC) in August 2020 resulted in a double-spending of over $5.6 million cryptocurrencies.

Smart contract attack

The Smart contract attack in the Ethereum Blockchain happens when hackers exploit the vulnerability of coding errors made by developers. Therefore, these contract developers must address the security flaws at the development and execution stages to avoid exploitation.

Small and medium-sized businesses that hold cryptocurrencies or assets must prioritize risk management. However, larger organizations must implement different cybersecurity protocols and policies to safeguard all their crypto assets. While it is becoming difficult to identify and manage new vulnerabilities in crypto technologies, it is necessary to strengthen encryption key management for custodial or non-custodial wallets and related private keys. This would be effective in reducing dependency on third parties. In addition, patch management and firmware updates for software and hardware wallets can help in enhancing their security.

It is necessary to focus on software development, update, and maintenance to prevent any unauthorized exploitation of Ethereum-based Smart contracts coding. While creating crypto-based digital commerce solutions, the active involvement of the security team is essential for overseeing all the phases of DevSecOps. For better risk management, the development of crypto-focused architectures will help to expose new attack surfaces. Enhanced network designs would also ensure the protection of locations that may be prone to crypto-risk.

Best Practices to Mitigate Crypto Vulnerabilities

Blockchain solutions affect the decision-making, access controls, financial, compliance, and legal aspects of businesses. Therefore, organizations must strengthen their security structure by implementing access control mechanisms, policies, and reporting systems. In addition, it is necessary to ensure compliance and application audits for risk mitigation. Businesses must also define the scope for every operational process and implement controls to shut any security loopholes.

Extensive research and studies have revealed a significant number of security flaws in the Blockchain system. However, the Blockchain industry is still in its nascent stage in identifying vulnerabilities and weaknesses. Below are some best practices to reduce crypto-vulnerabilities within your computing environment:

1. Implementation of identity and access control policies to regulate access.
2. The use of Hardware Security Module (HSM) to ensure the security of Blockchain identity keys.
3. For securing API-based transactions, enforce identification, authentication, and authorization for all APIs.
4. Implementing Privileged Access Management (PAM) for granting access to appropriate users for administrative purposes.
5. The use of data classification and privacy-preserving technologies for safeguarding sensitive information.
6. The use of access control to secure all aspects of the smart contracts.

Conclusion

Businesses must learn the basics of Blockchain tracking and crypto transactions to survive the dynamic currency environment. In addition, it is necessary to understand the security risks associated with crypto assets and Blockchain systems to implement proper cybersecurity protocols. The increasing value of cryptocurrencies makes them a lucrative target for cybercriminals. Therefore, it is crucial to use multiple security tools and robust quality control standards to secure the Blockchain system and its users.