Blockchain Security Audit: The Ultimate Guide

by ImmuneBytes
blockchain security audit: the step by step guide

Introduction

Blockchain technology has become the talk of the industry in recent years. As a foundational technology, it encompasses not only cryptocurrencies, which it initially started with but also a broad range of other use cases.

However, the rising acceptance of Blockchain in varied spheres of life does not imply it is free from flaws. Although the technology’s immutability supports security, applications built over it are still prone to attacks, challenging its reliability. 

This blog will discuss diverse domains related to the security aspect of the Blockchain revolving around the blockchain security audit. 

Blockchain Security Audit

Blockchain security audit enables cybersecurity professionals to analyze the set of codes deployed on it thoroughly. Primarily, the goal of an audit is to detect and eliminate vulnerabilities. 

A comprehensive audit practice examines the blockchain project’s smart contract code presented by the project’s developers. 

Why does Blockchain need a Security Audit?

One reason for Blockchain’s rapid adoption is that it offers digital information and services with unparalleled security.

Still, there is a question mark on how secure the technology is, appropriating the need for security audits.

Following are a few factors demonstrating the need for a blockchain security audit. 

Preventing Blockchain Security manipulation by cyber criminals 

There are four common attacks that have resurfaced time and again, posing security challenges to blockchain protocols. 

  1. Phishing attacks

A phishing attack attempts to steal credentials or trick users into logging into the attacker’s wallet, making them the new recipient of any transactions.

  1. Sybil attacks

A Sybil attack is made to gain disproportionate influence over the network’s decision-making. To do so, a cybercriminal overwhelms the target network with false identities, causing the system to crash.

  1. Routing attacks

An attacker can divide a network into two (or more) disjoint components using routing attacks. The attacker forces the creation of parallel blockchains by preventing nodes within an element from communicating with nodes outside of it.

  1. 51% attack

A 51% attack (or majority attack)attacks the integrity of a blockchain system. Through a majority attack, a single malicious actor or organization gains control over more than half of the network’s total hashing power, potentially disrupting the network.

  • One thing that is the core of blockchain technology is its immutable nature. However, codes deployed on Blockchain once cannot be altered even for error correction because of the same. This makes the open-sourced code susceptible to hackers. 

Now that we know why it is imperative to conduct audits to secure Blockchain usage. Here, we will discuss the steps involved in a blockchain security audit. 

Recommended: Blockchain Security Services Provider

How to conduct a Blockchain Security Audit?

Blockchain applications differ from those running on centralized systems. As Blockchain is a decentralized distributed ledger system, you cannot halt the app’s operations and make the changes in case a problem arises.

As a result, there is a pressing need to conduct a Blockchain security audit in order to avoid cyber threats or mishaps.

Blockchain security audit or, in most cases, smart contract audit can be categorized into two forms. 

Types of blockchain security audit

Automated Audits, as the name suggests, deploy blockchain security audit tools to perform a smart contract code review to detect bugs. In contrast, manual audit calls for expert security professionals to audit the code for vulnerabilities. 

 For most crypto audit companies, an integration of two is deployed to conduct a thorough analysis for 360° protection. 

Following is a schematic showing the basic description of the auditing process. 

blockchain security audit process

Pros & Cons of Blockchain Security Audit

Moving further with our discussion. Let’s look at the pros and cons of including auditing in deploying code to a blockchain. 

Following are the pros of blockchain security audit:

  1. A security audit defines your project’s major systemic loopholes. It identifies where it meets and where it does not meet the criteria the organization sets to follow.
  2.  It is critical to establish trust with your customers and users. An audit serves as a security stamp, providing additional protection to your project. 
  3. Security audits are essential for developing risk assessment plans and mitigation strategies for organizations that deal with individuals’ sensitive and confidential data.
  4. An audit will create a hack-proof barrier around your project, protecting it from any potential threats.
  5. Auditing not only determines errors in the code but also optimizes it for performance. 

Further, let’s discuss the cons of security audit:

  1. Auditing can sometimes cost thousands of dollars, adding to the project’s cost. An audit can make s Smart contract deployment an expensive process.
  2. All relevant information must be shared with the auditors for a smooth auditing process. Whitepapers, business requirements, technical specifications, and other documents are included.
  3. Auditing is not a new concept. Still, headlines about crypto scams appear occasionally, indicating that auditing is likely not the only security layer required by a smart contract. 
  4. Although simple contracts like crypto-tokens can be completed in a few days, smart contracts with complex tokenomics like DApp and Defi can take weeks or months. 

How much does it cost?

There are no set criteria for determining the audit cost. However, it depends on the type and complexity of smart contract audit that influences the audit price. Alongside, it also depends on the crypto audit company performing the audit that determines the cost of auditing.

Since the audit is essential in ensuring blockchain project security, it must be included as a part of the deployment process. To get a fair estimation of your blockchain project audit, visit our audit cost calculator.

Sum Up

Auditing as a part of the blockchain space became popular with the rising use of smart contracts. Smart contracts can potentially change how we do business by making it easier to verify and execute agreements between buyers and sellers.

Despite their numerous benefits, blockchain projects are prone to errors. If a developer makes a mistake, a fallback operation may execute a faulty contract.

As a result, a blockchain security audit is helpful to ensure a reliable transaction in the world of decentralization.

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