How to hack blockchain: 6 most common attacks on cryptocurrencies and distributed databases

most common attacks

Any technology cannot be 100% secure, and blockchain is no exception. Most common attacks on distributed databases differ in the way they are conducted The target is a consensus mechanism, which allows the information that is entered into the registry to be altered.

Miners have the unique right to validate legitimate transactions within the network, and each miner’s share is determined by hashrate – the computing power of the blockchain. The more “power,” the easier it is to perform one of the following types of most common attacks-

The most common threat to the blockchain network. The name of the attack is an analogy to a controlling stake in the business sector. The problem is the Proof-of-Work protocol, which is also used by such projects as Bitcoin, Litecoin, Monero and others: the attack consists in collusion of more than half of the owners of all enabled computing hardware.

Such conditions allow the hacker to conduct a double-spending attack, in which he can spend more than he has in his wallet. The end result is a blockchain takeover, and all of the participants’ funds become the property of the hackers. In large networks, the chance of such an attack is several times lower because of the large number of participants and expensive equipment.

  • In August 2016, Ethereum, Krypton and Shift blockchains were subjected to a 51% attack. Millions of coins were stolen using double-spending. After the attack, developers strengthened the protection of networks, for example, in Krypton the number of confirmations required for a transaction was increased to one thousand.
  • In 2014, the Ghash.io mining pool exceeded 51% of its own bitcoin processing capacity due to the popularity of the network. Management voluntarily gave up some of its share and the value no longer exceeds 39.99%.
  •  the Eclipse attack- most common attacks

Eclipse attack is a special type of cyberattack where a hacker forms an artificial area near one node to control its actions. The attacker redirects outgoing and incoming data from the target node to its own, separating the deceived user from the real network.

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Isolating the target node allows it to confirm abusive transactions on its behalf and cut it off from communication with neighboring nodes – the hacker doesn’t need to hack the entire network, it’s limited to a small set of nodes. To block the node, a botnet or phantom network is used to fill the node with IP addresses for synchronization at the next connection.

The consequences of an eclipse attack are usually double-spending attacks, already mentioned above, as well as a power disruption to the miner, where the compromised user wastes power and time to solve artificial blocks that do not exist in the real blockchain network.

  • Routing attack- most common attacks

This is the type of attack that is possible when extraneous software is introduced into the client provider’s operations. Specialists around the world are monitoring the likelihood of such a hack. Even though the nodes in the blockchain network are scattered around the world, different ISPs communicate with each other and can have an impact on the network.

  • Attack-race

Another type of double spending. Inexperienced and hurried sellers may give up goods even if the transfer attempt is unsuccessful because there was a transaction attempt itself. Some entrepreneurs use “quick payments” without the necessary confirmation for small amounts. Such a transaction will be “in processing” in the recipient’s wallet and “not confirmed” in the addressee’s wallet.

A scammer can reverse such a transfer: send the transaction to the merchant’s node and to his online address, broadcasting only the second transaction to the blockchain. It is the latter transaction that will be considered valid, while the first transaction will be invalid.

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To prevent such an attack it is not recommended to accept incoming connections in the node and wait for several confirmations of the transfer (3 confirmations for the amount from $1000 to $10000, 6 confirmations for the amount from $10000 to a million, and for even larger transactions – up to 60 confirmations).

  •  Attacks on cryptographic function vulnerabilities

Experts on cyber-security say unanimously that the most vulnerable point of any system is a human, and hackers use it. Another consequence of the human factor is said to be code bugs, which, if detected, can make an attacker hack into an entire network.

As an example, in the Ethereum network a fraudster found a vulnerability in the source code and appropriated about $50 million in project’s coins, which was about 30% of all coins. Because of the incident, the community split into two groups (Ethereum and Ethereum Classic). The first, led by the creator of Ether, was outraged by the theft, proposing to make a hardfork and return the coins to the rightful holders. Their opponents were convinced that the real owner of the coins is now a hacker (“The code is the law”).

  •  Intentional overflow of the transaction queue

This case happened for the first time in 2015. Coinwallet.eu was stress-testing the blockchain network of the first cryptocurrency, sending several thousand transactions for processing. This is how the company wanted to resolve the discussion in the community about the size of the registry block. A month later, F2Pool made similar manipulations, conducting more than 80,000 transactions in a short period of time.

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The disagreement over block size continues today: it led to the creation of the Bitcoin fork, Bitcoin Cash. Users of this cryptocurrency have been accused of using this method of attack in order to attract large investments in their own projects.

common attacks on cryptocurrencies

The so-called DDoS attacks are based on sending a large number of identical requests. Bitcoin has built-in protections for such cases. For example, the size of blocks and scripts in the network is limited, which makes it difficult to clog pools of memory nodes. In addition, the number of signatures for verification and multi-key verification requests is also limited.

Blockchain clients block transactions of nodes with suspicious activity. In a recent Bitcoin Satoshi update, a feature was introduced to register non-standard transactions weighing more than 100 kilobytes. In addition to the addressee, the wallet and validity of the addressee are checked. 

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Our list includes only the most common attacks on blockchain systems – the variety is staggering. Some types of network hacks are financially interesting and profitable for fraudsters, while others are conducted out of curiosity or a desire to show society the fragility of the digital world. Nor should we discount advances in cybersecurity. Developers are constantly testing and incorporating security mechanisms into systems, upgrading software, and monitoring for potential attacks. If you want to invest in cryptocurrency, or build your own blockchain solutions, consider the risks. Good luck.

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