In today’s world, there is hardly a person who still does not use the automation of routine processes. Not only does something like an intelligent robot vacuum cleaner falls under the term “routine”, but also purely financial matters. Everything that surrounds us has long since been pulled from paper filing cabinets and moved into online computer systems. Payments and transactions are easier to make with your phone, you can sign valuable contracts electronically, and buy the same robot vacuum cleaner in another part of the world. It’s faster and more familiar – you say. And that would be true.
Where Did it Start
During the global crisis in 2008, the world’s economic system changed its appearance. Mankind was constantly trying to find ways of not being “absorbed” by events on the world stage. Confronting the general collapse brought cryptocurrency and the developments that allow it to function to the forefront. One such technology is smart contracts, whose spheres of influence, long ago, went beyond the cryptocurrency market. Thus, they are widely used by medicine, logistics, and transportation companies, the real estate market, the food industry, and many others.
What Is Smart Contract
In short, a smart contract is a well-defined algorithm that is embedded in a blockchain and executed by its virtual machine inside the system. Simply put, smart contracts are designed to control the execution of a transaction. This includes making sure all its terms are met without deviation or fraud. It is the pre-written algorithm of a smart contract that guarantees the transparency of the process because once it is running, it is impossible to change or correct anything. Sounds good, right? And it would be fine if it weren’t for cybersecurity issues.
Think back to your first computers and how often they were hit by all sorts of viruses until they invented software to avoid this. How much data and needed files were slipping away from the PC? Unfortunately, like everything new, smart contracts have not escaped a similar fate either. Like other types of software, they can contain bugs that can be manipulated for hacking and fraudulent manipulation. The year 2021 alone was marked by $1.2 billion in Defi hacks. So how does this work?
The “Vulnerability Portrait” of The Smart Contract
First of all, cybercriminals often try to find loopholes in smart contracts to be able to buy tokens without any restrictions. And, unfortunately, they succeed. Such a scheme destroyed the successful debut collection of Adidas.
But, security problems are not only hidden inside smart projects but also in the marketplaces on which they are hosted. They are often subject to hacker attacks, which also lead to a loss of money and resources. For example, users of the OpenSea marketplace lost 1.7 million tokens due to the actions of an attacker. Which, of course, led to a spike in the value of cryptocurrencies in general.
A very important problem was the issue of secure data storage, namely keys and passwords for accessing wallets and conducting transactions. Unfortunately, hackers conduct successful phishing attacks and get to users’ private keys.
In addition to the security mentioned above issues, there is also the threat of so-called replay attacks. The point is to hit the security protocol. In this way, attackers use replays to transmit the sender’s data to the right receiving system. This allows the thief to deceive the participant, who is piously convinced that the data transfer has already been successful. These attacks provide the ability to access the network, obtain important information that is naturally not in the public domain, and easily appropriate assets through the execution of double transactions.
How to Find The Safe Options
Of course, all of the above can significantly scare the potential user of new economic systems. It is logical because no one wants to lose their deposits. But, let’s go back to the same PCs and viruses we talked about before. That didn’t cause you to throw your computer away, did it? Even this article you’re reading on the Internet and you’re doing it with total peace of mind, aren’t you? This is precise because everything new should be tested several times and, fortunately, there are whole companies that can help in this matter. For example, here is the ranking of the most secure cryptocurrency. Here a team of professionals has already made an actual rating of cryptocurrencies on security. There you can find the necessary project, read its rating, understand which category it belongs to (for example crypto exchange, blockchain, DeFi, platform, and so on), understand the importance of token audit, and read information about the conducted audit of the platform, whether there is insurance and whether the platform was tested for cracked cases.
Why is This Necessary
The fact is that without a quality smart contract audit, you run the risk of becoming the very user who lost their contribution. There are entire companies that take a detailed look at the specifics and operational options of a project and only then proceed with an audit. It includes multi-level checks to simulate different threats that can make the system vulnerable (such as spoofing or DDoS attacks). Also, crypto-auditing is concerned with preventing opportunities for identity theft, right down to the aforementioned wallet keys. All of this information is publicly available at the resource above.
The digital age involves a significant change in everyone’s consciousness. People are increasingly moving away from established paradigms and familiar systems in search of more profitable scenarios. Of course, economic and geopolitical changes make more and more people turn to innovation. The main thing in this matter is not to be afraid and to listen to experts. The future is already here. All that is left is to become familiar with its possibilities.