The simple answer is yes, you can hack blockchain! But right after this we must say it is a process that takes time and requires money. There are three ways to hack blockchain: the first one is via protocol, second by means of wallets by using scams and phishing and in exchanges.

We have heard so many stories where people lose their cryptocurrency because it got stolen. In the article below we explore the reasons why this happens: is Blockchain insecure or are there more reasons for this?

Can you hack blockchain?

Although a simple question with a simple answer at first glance, the response has many layers and parts. For your convenience we have arranged them into groups so you can understand the vulnerabilities of the system of this technology that is developing.

Protocol

The set of regulations that manages the operation of the cryptocurrency is known under the name of consensus protocol. There are various protocols for different networks and what works on one cryptocurrency may not work on other. Thus, we listed the most famous four attacks that happened.

Sybil Attack

This attack may happen when one party controls large quantities of nodes which are used for flooding the net with bad transactions. There has never been a successful attack of this sort regarding a main cryptocurrency, primarily because the currencies are created to stop this type of hacks (for example the Bitcoin’s algorithm) and the second because it will be really expensive to perform an attack of this type.

An interesting fact

This attack got its name- Sybil because of the same title of the  popular book of psychology. The name refers to a girl with severe disorder in personality.

Routing Attack

Cryptocurrency is made possible via the Internet, while the ISPs represent gatekeepers that regulate the flow of the majority of the online traffic.

When routing attacks occur,the information that are sent and transferred to ISPs is intercepted by hackers and after they get in a network they can divide it into fractions.

Have you heard?

The company ETHZurich conducted research that showed that 30 percent of Bitcoin is hosted by 13 ISPs while the other traffic in the network of around 60% is hosted by 3 ISPs.

The hacking attempts occur often on the net but this is not the case when we are talking about blockchain as there is no such an example until now.

Blockchain network creates a partition and considers that the nodes are signed off and proceeds operating. What the hackers can do is create big number of fake transactions on the partition sides and with the coming down of the partition the chain that has good transaction is shorter and the network will reject it and thus accept the fraudulent transaction and legitimize them.

DDoS attack

DDoS attack is one of the most common and most known. DDos (Direct Denial) attacks by flooding the servers with large number of traffic. Thus, the legitimate requests are prevented to get information and the service is crashed.

In our context this would mean, if someone wants to crash the system it would have to create fake transactions in large amount. Again, it is worth mentioning that Bitcoin is highly resistant to such attacks.

Why is this so? If a person wants  to create a big number of transactions he/she needs to pay fees for nining for every transaction and this is very expensive. Nowadays there are many networks that follow the example of Bitcoin and have security protocol that is similar to the Bitcoin’s one.

Majority attack 51%

This type of attack appears when 51% hashing power is controlled by a miner. What this means in practice for the users is that they can spend the cryptocurrency two times and the network will not know about it because the hackers perform attacks of double spending.

This type of attack is more common for small networks because of the more affordable costs compared to Bitcoin as a large network.

Exchange

Exchange is a location where customer purchase and trade the cryptocurrencies. At the moment, the biggest exchanges are not decentralized and thus they are subject to frequent attacks because it is pretty straightforward to access the databases and steal the data or cryptocurrency.

Have you heard?

The exchanges is a place where the theft of cryptocurrency mostly occurs. One example is the theft that happened at the beginning of 2018 when over 700 millions dollars was stolen.

Compared to the centralized exchanges the decentralized ones provide bigger security but their level of adoption is not the same.

Wallets

Just like in day to day’s life the owners of the cryptocurrency have their wallets to keep the money inside. There are losses but most of them happen because of human error and not specific attacks of the wallet themselves.

What to expect

Noone is without witness and this is the case with blockchain as well. The difference is that in this case the communities which developed Blockchain address all the issues regarding the security.

The points of weakness come from its use and less with the structure. We are all interested in raising the data security and thus their protection in the database should grow.