Developers made the first blockchain back in 1991. But it wasn’t until 2008, with the introduction of Bitcoin, that it became the talk of the town. That’s mostly because of their heightened security when recording transactions. But, even as a shared ledger with a decentralized structure, blockchain hasn’t been free of security issues.
In fact, In 2021 (during a brief peak) there was an increased reporting of blockchain security issues and losses in conjunction with the increased interest in blockchain. This included network attacks, phishing, rug pulls, 51% attacks (when a single entity controls more than 50% of a network and uses this maliciously), and cryptojacking.
And losses weren’t minor, in fact, they were in the billions of dollars. So, given this, what steps or best practices can we implement to mitigate these losses in the future? That’s what we are going to explore next.
1. Installing a virtual private network (VPN)
A VPN is an excellent way to avoid bad actors and improve your blockchain security. And because they encrypt data traffic, your information gets an additional layer of protection.
By keeping your IP address and location private from these malicious actors, VPNs significantly improve your privacy. Ultimately, they grant you a lot of protection from network attacks.
The most tricky part of using a VPN is simply selecting the right one for you. The best (paid) VPNs include:
2. Maintaining the latest security updates
As malicious attackers get a bit more crafty, so do software companies. So, one of the best ways to prevent blockchain issues is by ensuring that your software is up to date (software maintenance is never-ending, after all).
Just make sure that your blockchain security software provider is reputable and reliable. Ideally, you’d want one with a decent track record and good long-standing.
3. Using two-factor authentication (2FA)
2FA goes a long way to improving your blockchain security. We all know that passwords can become compromised (be it through negligence or a keylogger).
2FA keeps you protected by requiring an additional validation factor (usually a one-time pin sent to your mobile device or email) along with your password.
And while not without potential flaws (such as if hackers have compromised your email), it goes a long way toward ensuring the security of your blockchain space.
4. Conducting smart contract audits
Smart contract help towards ensuring the security of your blockchain. They can assist in the prevention of a huge range of security issues, such as fraud or hacking.
They also ensure that the contract’s intention is maintained and that malicious actors don’t exploit loopholes.
Smart contract audits do so by conducting a review of the contract’s code and identifying any vulnerabilities that hackers may capitalize on. They also determine whether there are any bugs or errors.
There are various tools you can use to perform an audit (such as Mythril or Securify).
5. Employing Consensus Mechanisms
Consensus mechanisms will help protect your blockchain by ensuring the immutability of your blockchain data. Consider how the consensus mechanism requires all network participants to agree on the transaction’s validity.
In addition, these mechanisms help protect your blockchain network from 51% attacks and also prevent double-spending attacks. These attacks occur when a malicious actor attempts to spend a cryptocurrency twice, which compromises the network’s integrity.
The two most utilized consensus mechanisms are Proof-of-Stake (PoS) and Proof-of-Work (PoW).
You can think about them like this:
- The PoS mechanism is a way to decide which users validate transaction blocks. Validators put a stake (or deposit) into a cryptocurrency. The more they do so, the greater their chance of being added to the blockchain.
- The PoW method is a similar technique but instead of stakes, validators use computational power to solve complex mathematical puzzles to validate transactions. This uses much more energy than the PoS method.
6. Utilizing anti-phishing tools
Phishing attacks are growing in frequency and becoming more sophisticated as time passes. While you can take steps to prevent successful phishing attempts (such as being wary of suspicious emails or messages), this isn’t a foolproof strategy.
So, that’s where anti-phishing tools come in.
These tools go a long way towards identifying and subsequently blocking phishing attempts and, ultimately, improving your blockchain security.
Consider how anti-phishing tools are able to do constant real-time analysis of the web pages you enter. They’ll warn you of any potential threats if you enter a suspicious link.
These tools also work by blocking any malicious attachments you attempt to download.
7. Keeping your private keys secure
By keeping your private keys offline, you’ll be making strides toward protecting yourself from hacking. Ledger, for instance, is a hardware wallet that provides secure and simple private key management.
Alternatively (or in combination with a hardware wallet) you’d do well to ensure that the password for your private key is relatively complex, with a good mixture of numbers, symbols, and letters.
You could also make a backup on an encrypted USB drive, which you can store in a discrete location at home.
8. Practicing digital hygiene
And last (but undoubtedly not least) is simply practicing proper digital hygiene.
There are quite a few things you can do in this domain. However, most of all, you should maintain proper password security.
A major hindrance for many people is that they don’t want to make complex passwords for the mere reason that they may forget them at a later stage.
Well, password managers can help with this by not only storing passwords but also generating complex and unique ones, which significantly improves your efforts to protect your blockchain. Bear in mind that it may be wise to also employ offline password saving, in addition to using a password manager.
Along with this you should also make sure to do the following things:
- Be careful about who you share your passwords with.
- Install a browser guard (such as Malwarebytes Browser Guard).
- Hone up on your blockchain security knowledge — keeping up to date with the latest best practices and staying aware of common vulnerabilities will keep you alert and protected.
Becoming a cybersecurity expert
Blockchain security issues are prevalent, and you could almost say, likely. But with the above suggestions (and by doing some further reading), you can make strides toward protecting your blockchain.
Nowadays, we all have to become cybersecurity experts (albeit novices).