It is Time for Blockchain to Embrace the Level of Security Its Users Deserve

It is Time for Blockchain to Embrace the Level of Security Its Users Deserve

  • By Shashi Kiran
  • Dec 12, 2022

Blockchain technology was built in part on a principle of high-level security, but it is increasingly clear that this is not always the case, as noted by a recent DARPA analysis noting how cryptocurrency tech is vulnerable to tampering.

Under this backdrop, it is time for blockchain providers -- which extend well beyond the realms of cryptocurrency and NFTs – to give their users the level of security they deserve and, in some cases, thought they already had.

How Blockchain Security Got to Where It Is
From a hacker's perspective, crypto is proving to be a gold mine. The latest trend for hackers is targeting blockchain “bridges,” which are tools used to transfer tokens between blockchains. Through the first seven months of 2022 alone, more than $1 billion has been stolen from these blockchain bridges.

In many cases, these breaches are a result of key mismanagement. When you give power to people, which blockchain does on the surface, it gives them a certain amount of freedom but it also comes with responsibility. Even if an organization’s security fundamentals are solid, for example, malicious actors can still perform user-level trickery and fool users into signing away things or giving up private keys. It is not so much that there are problems at the root of blockchain as a technology, it is just that it has created an environment where individuals who aren't sophisticated when it comes to security find themselves in control of high-value things and become targets of sophisticated hackers.

The gap that needs to be filled is not building new protocols but rather adding more controls at the user level. This will vary depending on the size of an organization, but there could be five levels of approvals – a transaction of a certain size might require sign-off from multiple people in separate locations. Ethereum has dapps, which brings a level of programmability to the platform, but they’ve also created trouble where people don’t know which apps they are authorizing or what they are signing.

Leveling Up Blockchain Security
What can organizations do, specifically as it relates to blockchain security? Encryption technologies play particularly well with how blockchain was crafted from the get-go. Private keys are used to sign transactions, such as giving bitcoin to someone else, and encryption creates an extra layer of security on top of whatever protocols an organization already has in place.

Specifically, encrypting data while it is in use is vital. Following the $100 million exploit on its Horizon bridge, Harmony founder Stephen Tse tweeted "Private keys were stored encrypted by Harmony. These keys were doubly encrypted using a passphrase and a key management service... The system was designed to avoid persistent storage of plaintext secrets at rest."

However, double-encrypting the keys when at rest is irrelevant; when the keys are in use, they are brought to the main memory. And if the memory of the process using the key is eventually dumped, it can be extracted by malicious hackers.

In addition to technology, however, there is a need for improved education at the user level. There is an opportunity for organizations to create platforms that are usable but don't have too many “sharp knives” lying around so everyday users can sense what is happening.

In terms of education, a lot of it is basic, but still needs to reiteration: do not share passwords with others, and certainly do not share private keys. Common sense should work in theory, but the trouble is there can be millions of dollars at stake, meaning hackers will go the extra mile in an effort to fool users.

Inside the Tech That Will Lead the Way
Education is vital in the quest for advanced blockchain security, but tech will of course play a significant role as well. Confidential Computing, which uses secure enclaves to create a trusted execution environment and encrypt data while it is processed, is an increasingly important tool for blockchain security. Confidential computing-supported technologies and techniques augmenting blockchain and the Web 3.0 era include:

  • Improved security by moving the two-factor authentication process to a highly secure trusted execution environment.
  • Reduced trust barriers by giving end users full control over access to their digital assets, even if the underlying backend system is compromised.
  • Lowered operational risk by quickly and easily revealing to regulators that user assets cannot be used without the fully auditable approval of the end user.
  • Fully supported disaster recovery that helps avoid the loss of digital assets should malicious actors compromise a system.

Confidential Computing as a technology has many use cases, and it is becoming increasingly adopted for blockchain security. At its core, Confidential Computing technology gives organizations an ultra-high level of security that won't be compromised, which is a growing need for blockchain-powered systems and platforms. Those who can harness it effectively set themselves up for a win-win-win situation: significantly reduced critical incidents, smoother regulatory and security compliance and, perhaps most importantly, high levels of satisfaction among end users and customers.

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