Many of us know about cryptocurrencies and how to invest in them. However, very few have an understanding of the technology and real-world behavior associated with it. Cyber attacks and hacks can impact supply and demand, acceptance and usage, efficiency, infrastructure development, price stability, and market valuation.
Blockchains can withstand traditional cyber attacks quite well, but hackers are developing new methods for attacking blockchain technology. Let’s have a look at the most common attack vectors on the blockchain.
A blockchain network is made up of nodes that validate transactions and provide other services. These attacks took advantage of the process by which transactions are added to the blockchain’s distributed ledger. They exploit vulnerabilities in the working of nodes or miners.
In computing, a Distributed Denial-of-Service (DDOS) attack is one in which an attacker attempts to make a network resource inaccessible to its users. It is executed by flooding the network with a large number of requests to overload the system. It is an attack that may affect any internet service, not only blockchains.
In the context of blockchains, DDoS attacks target the protocol layer, with transaction flooding being the most dangerous to blockchains. Attackers can launch DDoS attacks from within the blockchain ecosystem. A DDOS attack is far more difficult to counter since it requires distinguishing between legitimate and fraudulent requests.
Most blockchains have a set block size and restrict the number of transactions that may fit inside a block. Attackers can fill blocks and prevent valid transactions from being added to the blockchain by submitting spam transactions. When this occurs, all legitimate transactions are placed in the mempool and await the next block. Legitimate transactions that are not uploaded to the blockchain constitute a system failure.
The most popular attack on the public PoW blockchain. An attack on a blockchain by a group of miners who control more than 50% of the network’s mining hash rate. Owning more than 51% of nodes gives access to altering the blockchain.
Attackers gain majority network control and prevent the recording of new blocks by stopping other miners from finishing them. Because prior transactions are hard-coded into Blockchain's software, changing historical blocks is impossible. Although it is impossible that a successful attack on large blockchains like Bitcoin or Ethereum would occur, Smaller networks are frequently victims of 51% attacks.
Transaction malleability attack deceives the victim into paying twice. Every transaction on the Bitcoin network has a hash that serves as a transaction ID. If attackers are successful in changing a transaction's ID, they can attempt to broadcast the transaction with the modified hash to the network and get it validated before the original transaction.
If this occurs, the sender believes the first transaction failed, but the money is still removed from the sender's account. If the sender performs the transaction again, the identical amount will be debited twice. Once the two transactions are validated by miners, the hack is complete.
Timejacking takes advantage of flaws in Bitcoin's timestamp management. Each node has an internal counter that indicates network time. This is based on a node's peers' median time, which is sent in the version message when peers join. During a time jacking attack, a hacker modifies the node's network time counter and compels it to accept an alternate blockchain.
This is possible if a malicious person adds multiple fake peers to the network with incorrect timestamps. By connecting as many peers and providing false timestamps, an attacker might possibly slow down or speed up a node's network time counter. For example, a small number of Tor clients might transmit enough messages to overwhelm the node's median time. It can be avoided by limiting acceptance time ranges or utilizing the node's system time.
A Sybil attack is set up by assigning many IDs to the same node. As there are no trusted nodes in blockchain networks and each request is sent to a number of nodes. During a Sybil attack, a hacker takes control of numerous network nodes. The victim is then surrounded by fake nodes that cancel all of their transactions. 51% attack also comes under this type of attack.
Finally, the victim opens himself up to double-spending attacks. A Sybil attack is difficult to detect and prevent, but the following methods can be effective: raising the cost of generating a new identity, demanding some level of trust for network access, or assessing user power based on reputation.
A routing attack can impact both individual nodes and the whole network. The goal of this hack is to modify transactions before sending them to peers. An attacker can separate a network into two (or more) different components. The attacker prevents communication between nodes within a chain and those outside of it.
The attacker establishes rival blockchains in this manner. When the attack is over, all the blocks mined along the smaller chain are discarded. Any transactions and miners' profits are also deleted.
Eclipse attacks isolate a network node and hide its view of the other nodes. The attacker then inundates the network with fraudulent nodes, which interact with the infected node. The diverted incoming and outgoing traffic isolates the attacked node from the rest of the network. It requires the hacker to control a large number of IP addresses or have a widespread botnet.
The attacker then overwrites the addresses in the victim node's database and waits for the victim node to resume. After resuming, all outbound connections from the victim node will be redirected to the attacker's IP address. This lets the victim avoid obtaining transactions in which they are interested.
These attacks occur due to the vulnerabilities in the code of the smart contract. The function inside the smart contract makes a call to an external function. Then the external function drains out all the funds by making a recursive call. The hacker uses an external function to drain funds till the contract is not updated.
Front running is the act of placing a transaction in a queue with the insight of a future transaction. Front running on a blockchain network often occurs when a miner with access to information on pending transactions sets an order that would profit him from a pending trade.
It requires bots to quote a higher gas price than a pending deal, thereby expediting its execution.
Though blockchain's popularity continues to grow, there are issues in the process of developing blockchain's multi-domain applications. A growing number of cyber attacks on blockchains may harm their credibility. As a result, enhancement of blockchain defensive methods in various situations is necessary in order to broaden the practicability and applicability of the approaches and maximize the value of blockchain.