Security Risks of Distributed Blockchain Applications and Data Storage

Before the rise of the internet, many businesses operated with a local access network. Desktop computers throughout a building had a hardwired connection to local servers and employees could access programs and data stored on the network.

Assessing the Risks of Distributed Blockchain Applications and Distributed Cloud Data Storage

This system had a low level of security risk. To illegally access data, a criminal outside of the organization would need to sneak into the building or persuade an employee to copy data onto a disk.

The internet greatly improved the ability of organizations to communicate with the world, but it also made networks vulnerable to attack. If a criminal can access the network, all of the data on the server becomes vulnerable. The fear of data breaches, ransomware and other malware became a daily reality for most businesses.

The Blockchain Impact

The advent of blockchain technology has created another way for organizations to conduct online business. Blockchain acts as a digital record of transactions. For most people, they are familiar with blockchain in terms of person-to-person financial exchanges. For example, cryptocurrencies like Bitcoin allow people to send and receive money without requiring a third party like a bank.

However, many other applications can use the blockchain model. Distributed applications, or dApps, allow organizations to access software programs and share data within a closed network of users.

An important difference between the older LAN model and a dApp is that the software lives on multiple nodes within the community. Coupling a dApp with a cloud-based storage solution creates a secure but flexible way for a company to work cooperatively online.

Benefits of a dApp

Many organizations are attracted to dApps because it removes some of the risks of storing information with a third party like AWS. Tech-savvy employees trust dApps because they are not dependent on a larger company. The blockchain structure means that the user community manages the software. In most cases, the software is open source, and changes require community consensus.

Using a dApp protects companies from data loss. When companies store all their information on a central server, a natural disaster can destroy the data. Ransomware attacks can also hold local servers hostage. By storing information and applications over a distributed network, losing access to a server ceases to be an emergency. So long as one node is active, the network can still recover and function.

Security Risks of Blockchain, dApps and Cloud-Based Storage

Anywhere there is centralized data storage, it is attractive to cybercriminals. Cloud-based solutions like dApps and distributed cloud storage can keep data safe, but they are not without security risks.

Human Error

No matter how advanced the technology, there are still fallible human beings logging into the online community. If a cybercriminal can access the dApp, there can still be a data breach. Because dApps allow for remote connections, an open device stolen at a coffee shop can leave the network vulnerable. Human error in a successful spearphishing attack can reward criminals with similar access.

Open Source Issues

One of the attractions of dApps is the open-source nature of the code. Everyone in the community can see what programs do and how they work. However, when cybercriminals manage to get images of the code, it is an easy matter to search the program for vulnerabilities.

Because this is a new technology, there is still a learning curve around best practices. There have been cases where the dApp code contains crypto key information. If the code accidentally contains private information or other access information, the dApp will be vulnerable to attack. As a rule, developers should minimize the amount of data that sits in the smart contracts of the blockchain structure.

Data Issues

Although the framework is changing, dApps are tied to centralized data storage sites. This connection means that data breaches are still a possibility even with a cloud-based solution.

Keeping dApps Safe

As more businesses migrate to dApps and other cloud-based structures, it is important to keep safety and security in mind. Even as technology changes, cybercriminals will look for ways to infiltrate it.

Protect the Keys

Users access dApps using private cryptographic keys. Using cryptography to verify a user’s identity is an excellent security measure so long as no one else gets the key. IT departments must be certain that key information does not end up embedded in the dApp or in a public file. They also must work to make certain no one in the organization gives their key information away.

Protect User Information

Before uploading files to a cloud-based storage solution, be certain that you do not include information that could seriously damage your company in a data breach. Users should store their sensitive data locally.

Educate Users on Safety

As with most technology, security issues are often the result of lax security practices. Even though dApps may be more secure than other remote networks, they are still vulnerable. IT departments must regularly train employees to keep login information safe. An organization may want to employ a two-step verification process around requests for sensitive information.

dApps and cloud data storage are changing the online capabilities of many businesses. With proper security measures in place, they are a safe way to increase productivity and flexibility on the web.

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