Security challenges facing blockchain

Kia ora,

The fascinating world of blockchain and cryptocurrencies is always in flux, and with these shifts come some unique challenges, especially on the security front. Last week, we had the pleasure to host an event at the beautiful Lane Neave offices to hear about the current blockchain market and the security risks with Chainalysis. Mike Meisels from Chainalysis gave us a rundown on what they do and what trends they’re seeing in the blockchain security world. I was blown away by Mike’s insights, and thought this month I’d give a quick overview of the conversations we had.

Back in 2014 to 2017, hackers found a gold mine in centralised exchanges and services, taking full advantage of the security gaps present. But, as we do in this industry, we adapt. These platforms upped their game, bolstering their security and strategically moving assets from hot to cold wallets, reinforcing the protection of tokens and keys.

Fast forward to 2021, and we’re sailing on the wave of decentralisation, with Decentralised Finance (DeFi) taking centre stage. And while it’s a thrilling ride that offers speed and flexibility, there are bumps on the road. Small bugs in smart contracts, for instance, can be leveraged to make unauthorised changes in ownership.

Let’s not forget the COVID-19 era. Who could miss the surge in ransomware attacks? The challenge is that blockchain transactions, given their semi-anonymous nature, can make it tough to trace these malicious activities.

Then, of course, there are scams, which continue to be a thorn in our side. They’re often orchestrated by the same dark figures behind hacking and ransomware. They exploit blockchain’s transparency to make their schemes appear legitimate. Investment scams, giveaway scams, and, surprisingly, romance scams have all come under the spotlight.

Romance scams have become particularly concerning in Australia. Crafty fraudsters are leveraging social media to manipulate unsuspecting victims emotionally, leading them to transfer money via cryptocurrencies. While we’ve seen crypto exchanges stepping up to implement protective measures, it’s clear this issue stretches beyond just technology. It’s a societal issue, underlining the need for improved digital literacy.

So, as we continue to navigate these uncharted waters of blockchain and cryptocurrencies, remember that as much as they’re revolutionising financial transactions, they also bring unique security challenges. Stay sharp, stay informed, and let’s continue to protect our digital assets in this ever-changing landscape.

Ngā mihi nui,

Alison Mackie
BlockchainNZ Executive Director

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