Blockchain platforms have dominated several technical discussions globally in recent years. This is because a wide range of independent apps support the technology, which is also at the core of almost every cryptocurrency in use today. In this regard, it is worth noting that the use of blockchain has permeated a number of new industries, including banking, finance, supply chain management, healthcare, and gaming, among many others.
As a result of this growing popularity, discussions related to blockchain audits have increased considerably, and for good reason. Blockchains allow for decentralised peer-to-peer transactions between people and corporations, but they are not impervious to hacking problems and intrusion by other parties.
Just a few months ago, bad guys were able to breach the gaming-focused blockchain platform Ronin Network, eventually paving the way with more than $600 million. Also, late last year, blockchain-based platform Poly Network fell victim to a hacking scheme resulting in the ecosystem losing over $600 million in user assets.
There is several common security issues associated with today's blockchain networks.
Blockchain's Existing Security Conundrum
While blockchain technology is known for its high level of security and privacy, there have been some cases where networks contained loopholes and vulnerabilities related to insecure integrations and interactions with third-party applications and servers.
Likewise, certain blockchains also suffered from functional issues, including vulnerabilities in their native smart contracts. Up to this point, sometimes smart contracts (self-executing pieces of code that automatically execute when certain predefined conditions are met) have certain bugs that make the platform susceptible to hacking.
Finally, some platforms have applications running that have not passed the necessary security assessments, making them potential points of failure that can compromise the security of the entire purple down the line. Despite these obvious problems, many blockchain systems have yet to undergo a major security management or independent smart contract security audit.
How is blockchain security audits performed?
While several automated auditing protocols have appeared on the market in recent years, they are not as efficient as security experts manually using the tools at their disposal to perform a detailed audit of a blockchain network.
Blockchain code audits are done in a very systematic way, so that each line of code contained in the system's smart contracts can be properly verified and tested using a static code analysis program. The entire flow for the blockchain audit is illustrated below.
Establish the purpose of the audit
There is nothing worse than a reckless blockchain security audit as it can not only lead to a lot of confusion regarding the inner workings of the project, but it can also consume time and resources. Therefore, to avoid getting caught up in a lack of clear direction, it is best for companies to clearly outline what they may be seeking to achieve through their audit.
A security audit is designed to find significant hazards that might impact a system, network, or technological stack, as its name fairly indicates. During this step of the process, developers often limit their goals to specifying which area of their platform they would like to assess more rigorously.
Furthermore, it is better for the auditor, as well as for the company in question, to draw up a clear action strategy that must be followed throughout the operation. This can assist ensure that the safety assessment stays on track and that the best possible process result is produced.
Identify the essential elements of the blockchain ecosystem.
Once the main objectives of the audit have been defined, 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 review the platform's native technology architecture and its associated use cases.
When participating in any smart contract review, auditors first review the current version of the system's source code to ensure a high degree of transparency during later stages of the audit trail. This step also allows analysts to distinguish between different versions of code that have already been audited versus any new changes that have been made since the beginning of the process.
Isolate the main problems
Blockchain networks are known to be made up of nodes and application programming interfaces (APIs) that are connected to one another through both public and private networks. Since these entities are responsible for conducting data relays and other core transactions within the pink, auditors tend to study them in detail, performing a variety of tests to ensure that no digital leaks are present anywhere in their respective domains.
Threat Modeling
Threat modelling is one of the most crucial components of a thorough blockchain security evaluation. In its most basic sense, threat modeling allows potential problems, such as data fraud and manipulation, to be discovered more easily and accurately. It can also help isolate potential denial-of-service attacks while exposing any potential data tampering that may exist.
Solve the issues at hand
Once a thorough analysis of all potential threats related to a specific purple blockchain has been completed, auditors often employ certain white hat (ethical) hacking techniques to exploit the exposed vulnerabilities. This is done to assess its severity and possible long-term impacts on the system. Finally, the auditors suggest remedial measures developers can employ to better protect their systems from potential threats.
Blockchain audits are essential in the present business environment
As mentioned above, most blockchain audits start by looking at the basic architecture of the platform to identify and eliminate potential security flaws from the initial design itself. Then, a review of the technology in play and its governance structure is done. Finally, the auditors seek to identify issues related to smart contacts and applications and study the APIs and SDKs associated with the blockchain. Once all of these steps have been completed, the company is assigned a security rating, indicating its market readiness.
