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Main article: Blockchain
2022
$2.5 billion stolen from blockchain platforms by hackers
In January-September 2022, the damage from hacker attacks payments in the blockchain world amounted to $2.5 billion, including $483 million in the third quarter. This is stated in a report by researchers Slowmist Hacked and Atlas VPN, published at the end of October 2022.
The most popular among hackers was the Ethereum ecosystem platforms - from there, $348 million was stolen as a result of 11 attacks in the third quarter of 2022. In second place in terms of stolen funds is the Polkadot ecosystem - $52 million as a result of only two attacks. On the third - the Binance Smart Chain (BSC) ecosystem: $28 million as a result of 13 attacks.
The Solana ecosystem (SOL) lost more than $6 million in cryptocurrency during this period as a result of three hacker attacks. In four cases, blockchain-related attacks resulted in losses of $5.1 million. Three times, hacking cryptocurrency exchanges allowed cybercriminals to steal funds worth $6.8 million.
Experts from Atlas VPN noted that the cryptocurrency market is experiencing a "bearish" trend, due to which hackers are less active. The point is that at the beginning of 2022, the cryptocurrency market was estimated at $2.2 trillion. By the end of October 2022, its capitalization fell to $1 trillion. That is, the lower the rate of cryptocurrencies became, the less there were cyber attacks.
In the third quarter of 2022, 55 hacks occurred, while in April-June there were 96. The number of blockchain hacks in the third quarter of 2022 decreased by 28% compared to a year ago. If the cryptocurrency market continues to fall, then in the fourth quarter of 2022, most likely, about the same number of hacks will occur as in the third, the researchers predict.
{{quote 'Blockchain technology is an excellent example of how the principles of security in financial transactions and information transfer were implemented in a revolutionary way. But despite this, the technology still attracts cybercriminals who exploit it for their own purposes, summed up in Atlas VPN[1] }}
DARPA: Blockchain is not such a secure technology
In June 2022 , the U.S. Defense Advanced Research Development Agency (DARPA) released a study questioning the security of the blockchain technology that runs the software, raising concerns about its use.
Blockchain technology refers to software that stores information in a secure decentralized network, where users require special cryptographic keys to decrypt and access data. It is a key technology that manages cryptocurrency transactions that must be decentralized to prevent any entity from tampering with information stored on its network.
 | The report demonstrates the ongoing need for careful analysis when evaluating new technologies, such as blockchain, as they spread in our society and economy, said Joshua Baron, DARPA program manager who oversaw the research. We should not accept any promises about security on faith, and everyone who uses blockchain to solve important issues should think through all the vulnerabilities associated with it. |  |
The report's authors found that some types of the technology could be subject to change, jeopardizing data stored on the blockchain where transaction records are stored.
| | The report provides examples of how this impossibility of changing data can be violated not by exploiting cryptographic vulnerabilities, but by affecting the properties of blockchain, network and negotiation protocol implementations. The data and, more importantly, the code placed on the blockchain are not necessarily semantically unchanged. | |
One of the most important components of a secure and decentralized blockchain system is a system of nodes, or participating computers, that make up the network.
If at least one of these nodes does not have proper security protocols or is simply under the control of an unscrupulous entity, data passing through the blockchain can be hacked or altered. This fact contradicts existing ideas about blockchain security and jeopardizes information stored in various blocks.
In addition, the mismatch of security protocols between nodes of a blockchain network or mining pool poses a security threat to each node.
The report also notes that all Bitcoin protocol traffic, in particular, is unencrypted, which initially does not pose a threat to data transmitted between network nodes. However, if any route between network nodes is damaged, external actors can potentially disrupt the transaction process.[2]
2020: Forrester: Blockchain is a groundbreaking technology, but it has problems
Blockchain is a revolutionary technology that will continue to develop in 2020 thanks to mass digitalization, which is taking place, in turn, due to the COVID-19 pandemic, said Martha Bennett, vice president and senior analyst at Forrester Research, in mid-May 2020. At the same time, she noted that blockchain has some problems that have yet to be solved.
| | It's revolutionary technology and it's not a frivolous statement, "Bennett said. She believes that the most successful blockchain-based projects will be those that use smart contracts and tokenization, but not to optimize existing systems, but to replace them. | |
| | One of the consequences of COVID-19 was instant digitalization. Most likely, this digitalization will lead to an acceleration of the development of some blockchain projects, she said, adding that those projects that are actively promoted are unlikely to be stopped. | |
However, not all projects will receive continuation - in the era of the economic crisis, due to the lack of sufficient resources, the most risky will be closed. The main thing for those who decide to stay is to clearly understand how to put the current project on commercial tracks and benefit from it, Bennett said.
According to her, there is a gap between pilot tests and commercial launch, which is not only technical in nature - since the business has not yet fully understood the technology, still at an early stage of its development.
| | Blockchain is an 80% business. And I will risk declaring that technological problems will be solved much earlier than non-technical problems, "she said. | |
For example, it refers to non-technical problems as state regulation. In turn, the analyst attributed integration with ERP systems of enterprises and the need for companies to find ways to interact with several blockchain platforms, the number of which is steadily growing, to technical problems.[3]
2017
Threats and Risks of Blockchain
In 2017, cryptocurrency transactions were thought to be protected and public key encryption schemes almost impossible to crack. However, this does not suggest that there are no vulnerabilities associated with unsafe key storage or theft by social engineering methods.
The presence of weaknesses may also be due to the blockchain platform, which may be unsafe due to the development environment used or the presence of vulnerabilities in the system's IT architecture.
Another threat is the emergence of quantum computers, which theoretically can open all encryption algorithms with open keys.
There is a dangerous "attack-51" associated with combining a network-critical number of participants in order to branch chains in a direction convenient for attackers
Why blockchain is not suitable for trading physical goods
On August 16, 2018, the management consulting company Boston Consulting Group (BCG) presented a study that examined the problems of introducing blockchain into the retail network. Despite the fact that companies and banks have been actively using blockchain since 2016, the authors of the report believe that the new technology is not suitable for trading with physical goods.
Blockchain, originally used as a platform for, is thought cryptocurrencies to be supposed to increase transaction transparency and reduce the risk of fraud. However, by August 2018, the turnover using blockchain is still too small to be safe to say when its volume will reach critical mass, the news agency reports. Reuters
According to the co-author of the BCG report Antti Belt, the main problem with the use of blockchain is that cryptocurrency is not intended for physical transactions - it is impossible to track a physical object in the virtual world.
| | It's a collision of two worlds, "he remarked. | |
In addition, the introduction of new technologies should be accompanied by the coordination of terminology, and it is not yet clear whether the transition to a blockchain platform is economically justified.
| | The market appeared a long time ago, and everyone uses their own language. How to determine the quality of products, delivery schedules, etc. - a coordinated action is required for both parties... People spend millions of dollars, and sometimes more than $100 million, on the IT system. The question is whether they want to do it again, "Belt said. | |
The researchers also note that it is unclear to what extent a merchant is willing to accept a blockchain that can reduce an already insignificant share of profits. The BCG report emphasizes that as the platforms are formed, the inefficiency of pricing and the uneven dissemination of information that underpinned the intermediary deductions will disappear, and the profits of sellers will disappear with them.
At the same time, according to analysts, the use of blockchain can increase the transparency of operations, create a more efficient and liquid market. Trade deals will cease to be limited to bilateral contracts and move to more flexible electronic platform-based transactions between multiple sellers and buyers. The wider the new technologies are introduced, the smaller the role of intermediaries will be, and it is not yet clear whether they will want to actively use blockchain.
BCG co-author Steven Kok notes that blockchain will be most beneficial in those areas of trade where the origin of the product plays an important role. For example, this applies to the diamond trade. So, since May 2018, De Beers has been using distributed registry technology to track the most expensive diamonds from their mining site to a sales representative in order to rid the supply chain of fraudsters and illegal exploitation of deposits
Companies, Natixis]] and IBM Trafigura are developing a blockchain solution for commodity trading financial transactions to be used in crude market transactions. oilUSA
Since the buyer, seller and the banks serving them are in the same register, all parties can simultaneously view and share the transaction status. They can monitor the operation from the moment of confirmation and validation of the new transaction until the process of checking the quality of crude oil, its final delivery and cancellation of the letter of credit.
Blockchain will become an effective tool in the raw materials market only if everyone uses it. Episodic transactions in the distributed register do not affect the overall picture, concluded in BCG.[4]
Low speed due to cryptography
Speed is often called a serious obstacle to the widespread adoption of blockchain. In terms of performance, blockchains are significantly inferior to traditional databases, and that is the reason: the cryptographic component, which, in fact, gives the blockchain such important advantages, implies complex calculations. For example, the bandwidth of the Bitcoin system is only seven transactions per second. Of course, this indicator cannot be compared with two thousand operations per second, on average passing through the VISA payment system, the maximum performance of which reaches 56 thousand transactions per second (however, this reserve is never used by more than a third even during the most active purchases).
Of course, blockchains are actively working to improve performance. In particular, for the BitShares crypto platform, it is announced the ability to process up to 100 thousand transactions per second, which, of course, sounds quite good. True, it should be borne in mind that the methods of determining performance that are used in BitShares differ from the generally accepted ones. Actually, the distributed nature of blockchain in principle complicates any comparisons, but so far the difference in performance remains huge and the score is not in favor of the new technology.
Infrastructure Configuration and Management
Setting up and managing infrastructure to support blockchain solutions is another challenge for organizations experimenting with the technology. Teams that deal with information security, transactions, cloud computing and many other processes are beginning to implement blockchain, positioning the technology in their companies as a new solution for working with data and/or code. At the same time, the said process can be very destructive - in particular, because so far there are no established methods for its successful implementation. In 2017, the first attempts are being made to improve the situation (for example, a Microsoft project called Bletchley or the Hyperledger blockchain project), but such systems are not yet ready for full launch.
In conversations about the fashion trend, businessmen often miss the main thing: blockchain is a new technology for working with data, and not at all a new product that can be resold at a profit. Of course, blockchain technologies will help reduce costs when working with documents, but first you need to pay a third-party contractor to develop the corresponding product.
Lack of reliable and efficient technology solutions
Another reason not to rush to introduce blockchain technologies for July 2017 is the lack of uniform rules of the game, that is, reliable and effective technological solutions available to everyone. Work in this direction is already underway - a working group has been created in Russia under the leadership of First Deputy Prime Minister Igor Shuvalov to introduce blockchain technology in public administration.
Perhaps, after the products created to solve state problems are tested within the framework of the administrative system, they can be proposed for implementation in the business community. An example of such work is the development by the Central Bank, together with a number of relevant departments, of an online platform that provides information and technical support for banking cyber defense systems, which should be ready by the end of 2017.
Lack of legal framework
The use of blockchain technologies for 2017 is outside the legal field. This can be illustrated by the example of ICO (Initial Coin Offering, that is, the initial placement of coins). Start-up creators issue their own digital coins (tokens) using blockchain technologies and exchange them for cryptocurrencies or fiat currencies to attract the necessary funding. The legal status of the ICO is not defined in any country in the world today, and therefore such investments have no guarantees of return.
The development of fundamentally new technological solutions is underway, but mass implementation of them should not be expected until the moment when blockchain technologies receive a specific legal status.
If you show excessive zeal today, you can get a product that will not justify the efforts and funds spent on it, since it can only be used for internal use in a specific company, "says Oleg Yakushev, an expert at CERIH Capital Management JSC.
Notes
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