Businesses seeking to leverage the power of the blockchain without being overwhelmed by the administrative complexities of back end management can turn to providers like Amazon, Microsoft, Oracle and IBM for blockchain-as-a-service (BaaS) offerings. With BaaS, companies can “build, host and use their own blockchain apps, smart contracts and functions on the blockchain” while the provider handles the details of infrastructure and management.
Although blockchain technology is a rapidly expanding industry set to generate $10.6 billion in revenue by 2023, business owners must still be aware of the potential vulnerabilities of a system previously touted as “immutable and unhackable.”
Potential Compromise of User Keys
Access to the blockchain is regulated through the use of public and private keys. Each user possesses a unique pair of these keys, which are secure as long as neither one is compromised during creation, storage or use. However, keys must be managed with the same care as any other access information. If hackers gain access to the platform where keys are stored, the data can be used to take over a user’s blockchain identity.
Due to this vulnerability, it’s still possible for hackers to use simple means like phishing attacks to steal blockchain access information. The difficulty involved in changing information once it’s been stored in the blockchain makes compromised accounts even more of a problem, which is why businesses must have reliable protection in place for all forms of access data.
Outsourced Security Management
As with all “as-a-service” offerings, the responsibility for security in BaaS falls to the provider. A business with well-managed onsite security can fall victim to malicious attacks if vulnerabilities exist in its chosen BaaS platform. Since blockchain is still a fairly new technology, it may have weaknesses no one has yet considered or discovered and which may not be manageable using existing security measures.
Businesses considering BaaS must evaluate the potential known vulnerabilities of providers and how these vulnerabilities could affect onsite security. Using a permissioned blockchain model with strong identity and access management protocols minimizes the risk of insider threats, but if something goes wrong on the provider’s end, it could compromise the information stored in customer’s blockchains.
No Solid Regulations Established
Unlike traditional cybersecurity, which is becoming increasingly more regulated to protect the privacy rights of users, blockchain technology by nature almost defies regulation. The original idea was to have a decentralized ledger in which information belonged to users, not companies or agencies, and although permissioned and private blockchains don’t share this characteristic, significant regulatory challenges still exist.
However, even without concrete standards, businesses taking advantage of BaaS are still responsible for compliance. This can be difficult, particularly for large companies dealing with international privacy regulations. Not having a single authority for blockchain regulation makes it difficult to learn from other’s mistakes, since protocols and processes aren’t transferrable from one independent blockchain environment to another. This could delay the implementation of an across-the-board solution, leaving systems vulnerable to attack.
Mistakes in Implementation and Use
Many of the issues of blockchain security arise during setup and implementation. By nature, the blockchain should be largely secure and unchangeable, but errors in the early stages of BaaS adoption can compromise a company’s entire blockchain from the start.
If a private key isn’t random enough when it’s created, for example, a hacker has a better chance of compromising a user’s credentials and gaining access to the blockchain. Just one compromised key could cause big headaches, since it’s very difficult to modify information stored in the blockchain, including critical data related to user identities.
Similar problems may occur if something goes wrong during the creation of internal protocols for verifying and recording blockchain transactions or when vulnerabilities exist in the codes of smart contracts. This may lead to problems with access control or allow hackers to compromise the interactions between parties in a contract and use the functions for their own private purposes.
A lack of rules and standards for blockchain use and governance leaves the creation of control and security protocols largely up to BaaS providers and the businesses using their services. Without adequate control measures for access and use, it becomes difficult to maintain consistent blockchain security and ensure all information stored therein is truly private.
The allure of blockchain-as-a-service may cause business owners to overlook or minimize the severity of these potential vulnerabilities in their zeal to adopt cutting-edge solutions ahead of the competition. Reduced overhead and ease of implementation can spur companies to invest in BaaS without fully considering the challenges, which can lead to devastating security consequences. Prior planning, knowledgeable guidance and a concrete understanding of the benefits and limitations of the blockchain is required for successful execution of this powerful developing technology.