It is widely known that the new decentralized digital ledger is immutable and highly secure. The blockchain is considered the foundation of all cryptocurrencies and non-fungible tokens, and it is revolutionizing how we transfer and store data. Although it is very hard to hack a blockchain or disrupt a transactional process, the blockchain is not 100% as it is prone to security breaches. Malicious individuals with enough resources can maneuver through the intricacies of the blockchain and disrupt its activity. This article will go over the types of blockchain attacks that can target this decentralized ledger.
Blockchain Network Attacks
The first type of blockchain attack targets the infrastructure of a blockchain network. Let’s first have a quick recap of how the blockchain actually works. The blockchain is a digital ledger that is distributed on a peer-to-peer network. This network is operated by nodes that verify each transaction and add it to a block on the blockchain.
The immutability of the blockchain lies in the fact that it is operated by thousands of nodes distributed across a peer-to-peer network. However, hackers look for network vulnerabilities and exploit them with different types of attacks.
Denial of Service
Distributed Denial of Service or DDoS is a blockchain attack that disrupts the normal traffic in a specific server. This happens when a hacker consumes all processing resources of a server by sending in too many requests, hence, overwhelming a server until the breaking point.
However, the blockchain in general is very resistant to DDoS attacks. That’s because this type of attack targets a point of failure within a targeted server. However, since the blockchain operates on several distributed nodes, no single point of failure exists. However, the blockchain is not immune to these attacks completely.
Traditional DDoS attacks can be conducted to slow the operating system of the networking nodes. This happens when an attacker sends many fake transactions and spams the network. This will create a disruption to the network since mempools will be overloaded and validators will have to sort out the spammy transactions. This might lead to software crashes, node failures, and network congestion.
Sybil attacks are a type of attack where one malicious individual or entity takes hold of several nodes on the blockchain network. The word ‘Sybil’ refers to a study about a woman who had Multiple Personality Disorder. Which makes Sybil attack a hacker with multiple accounts or nodes.
Sybil identities can make up enough nodes in a blockchain network in a way that can out-vote other legitimate nodes on the network. This can create disruption to other nodes by closing up all their transactions, hence blocking them out of the system.
A large-scale Sybil attack can also lead to the attacker getting hold of the majority of nodes and thus can perform a 51% attack.
Routing attacks are blockchain attacks that target both the network and the individual nodes. The attacker will divide the network into two separate parallel blockchains, blocking all communication between nodes. The new smaller chain will be of no use, and mined blocks will be disregarded since they don’t belong to the original blockchain.
An eclipse attack happens when the attacker isolates a node by creating a fake environment around it. So, the attacker will flood the network with fake peers around a specific node, obscuring the node’s vision. This is kind of similar to Sybil attacks, however, Sybil attacks target the whole network while Eclipse attacks target a single node.
Once a node is successfully secluded from others, the attacker can falsely validate transactions on the blockchain. Which, can ultimately lead to network disruption. However, the effectiveness of the attack depends on the efficiency of the targeted blockchain.
How does it work? Well, attackers will put out something called a ‘botnet’ which is an infected network hosted by a device. After the attacker takes hold of many nodes via a Sybil attack, the controlled nodes will deploy numerous IP addresses. Which will then redirect the legitimate node to the malware network.
Transaction Verification Mechanism Attack
Other types of blockchain attacks are the ones that don’t necessarily target the network but target the verification process of transactions. Network Nodes validate and process transactions before adding them to the blockchain. Before the verification process, transactions are unverified and so, they are vulnerable to malicious attacks.
Double-spending refers to when someone uses the same cryptocurrency twice to gain multiple services. Digital currencies can be duplicated by the malicious attacker to spend in different places. This type of attack cannot happen with real-world currency such as fiat. It can only target cryptocurrencies where there is no central authority that verifies the transactions.
How it works is that a malicious user can create a cryptocurrency by making a digital transaction with a specific person. The malicious user can use the same cryptocurrency that to send it again to a different person. This can happen because of the blockchain’s decentralization. Since miners/validators take time to verify transactions, the attacker can exploit this margin to duplicate transactions before they are verified.
A race attack is a type of double-spending attack that occurs when the attacker sends out two different transactions, one to the recipient and another to the network. Therefore, if the recipient receives the first transaction as the ‘legitimate’ one and accepts it, the attacker can then broadcast a completely different transaction to the network.
This creates the recipient the illusion of getting the money, however, the attacker has already used the money in a different transaction that was verified by the network.
This attack is also a branch of double-spending. A Finney attack occurs as a selfish mining attack where an attacker is a node on the network. The attacker would mine a block of transactions, placing in a transaction of him sending himself his own crypto back to himself without broadcasting the transaction.
Then, the attacker would send the same crypto to a seller who accepts the transaction. Then, the attacker will broadcast his initial block which will override the unconfirmed payment to the seller. Meaning that he bought something for free as a double-spending hack. However, this is hard to achieve because of the small time frame.
Most probably the most known blockchain attack, a 51% attack occurs when a hacker gets hold of over 50% of the total hashing power in the network. By controlling over half of the nodes, the attacker can create a fork. Thus, splitting the blockchain into two separate ledgers.
This type of attack can seem impossible to do since the blockchain’s network is huge with thousands of nodes operating it. This is why this type of blockchain attack is best effective when targeting smaller chains with fewer miners.
An Immune Future Blockchain?
People might question the immunity of the blockchain against malicious attacks, however, these blockchain attacks are very hard to deploy and would cost a lot of resources and computational power. In addition, the blockchain is a new technology that is constantly evolving and witnessing major security improvements. In fact, some blockchains are trying to create a post-quantum security system. All in all, it’s good to know about these blockchain attacks and the possibility of them occurring, before investing in this decentralized ledger.