The security of blockchain technology has always been a big hype for most people. It has been a thing of great contention and many people have come to believe that this technology is 100% hack proof but how true is that ?
In the two decades of the run of Blockchain technology, it has been plagued with several hacks attempts, some of which have been successful, here is a little run down to refresh your mind what we have been through in this space.
- In June 2016, a hacker exploited a flaw in the smart contract of **The DAO**, a decentralized autonomous organization that raised over $150 million in a crowdfunding campaign. The hacker managed to drain over $50 million worth of ether, the native cryptocurrency of Ethereum, from the DAO's funds. This led to a controversial hard fork of Ethereum, which split the network into two versions: Ethereum and Ethereum Classic.
- In July 2017, a hacker stole over $30 million worth of ether from **Parity**, a popular wallet service for Ethereum. The hacker exploited a bug in the smart contract of a multi-signature wallet that was used by Parity and several other projects. The bug allowed the hacker to take ownership of the wallet and transfer the funds to their own address.
- In November 2017, a hacker froze over $150 million worth of ether in **Parity** again, by exploiting another bug in the same multi-signature wallet. The bug allowed the hacker to accidentally kill the smart contract that controlled the wallet, making the funds inaccessible to anyone. The funds are still locked to this day, and there is no clear solution to recover them.
- In April 2018, a hacker stole over $18 million worth of ether from **Bancor**, a decentralized exchange platform for Ethereum. The hacker exploited a vulnerability in the smart contract of a converter that allowed the exchange of different tokens. The hacker was able to bypass the security checks and withdraw the funds from the converter's reserve.
- In September 2020, a hacker stole over $15 million worth of ether and other tokens from **Eminence**, an unreleased gaming project by **Yearn Finance**, a popular DeFi platform for Ethereum. The hacker exploited a flaw in the smart contract of the Eminence token, which allowed the hacker to mint unlimited tokens and sell them for other tokens. The hacker later returned $8 million worth of tokens to the Yearn Finance developer.
Decentralization ledger technology doesn't actually means it is hackproof, what it means is that the technology is immutable.
Although hashing is a good point of security for blockchain but this has also proven to be susceptible to hacks too.
According to a friend of mine who is a penetration tester. No technology is ever hackproof there are just levels of difficulties to bypass before you can conquer it.
So recently, some groups of hackers were able to maneuver the smartcontracts that powers decentralized applications targeting Uniswap, Aave and compound especially. The vulnerability allowed the hackers to manipulate the prices of the tokens that are used in the Dapps, and execute a series of flash loans, arbitrages, and liquidations, resulting in the theft of over $200 million worth of cryptocurrency.
With things like this occuring, it beckons on the question is blockchain actually hackproof, can it actually power the future of finance.
Well, from what we have seen so far, nothing is 100% hackproof so long under the face of the earth. Most of the loopholes that allows attackers to exploit these technologies are put in the smartcontracts themselves to allow them have a backdoor in the case of a necessity.
Hope you learnt something today, I am ticktalker and I always post crypto/educative contents.
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Until next time, stay SAFU.
Please whatever is written in the article above is for educative purposes only. I am not a financial advisor.
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