The world of technology, cryptocurrency, and security is always growing. We think it’s important, given its growth, for everyone to keep up to speed. Information is strength and knowledge is power. But with how quickly things grow and change, keeping up in the world of technology is difficult.
The Magic Media security team have worked with blockchain and smart contracts in the past. It’s something they’ve kept an eye on. On a security level, blockchain is secure by design. It is nigh impenetrable simply due to the nature of its composition.
However, blockchain is only as secure as what’s built onto it. The security of smart contracts and applications built on blockchain need to be considered. We’ve decided to tackle the topic of smart contracts and blockchain. We’ll try to break things down and make them more accessible to those outside these industries.
Blockchain is effectively a list of records. Usually transactions, it’s a digital ledger of interactions which are all recorded and kept on the ‘blockchain’.
Every interaction, every exchange, is given a ‘block’. And then any new interaction is connected to the previous – which validates and signs it in. This is where the strength of blockchain security lies. Each block or record is chained and verified from the previous one. Hence, ‘blockchain’.
The strength of blockchain security is in the decentralized nature of its operation. It is not owned or operated by any individual or group. It is just out there. Without someone or a single group in control, there can’t really be any abuses of power.
That might sound dangerous but it’s remarkably safe. Because every interaction and transaction is verified across as many machines as possible, you can’t really cheat the system. Because there’s no one system to cheat.
It’s a whole group of machines checking and agreeing individually whether it is valid and true. These systems are automatically checking for legitimate codes and values.
In its operation, with these multiple systems checking every new entry, it’s a strong and secure system to operate within.
Smart contracts are basically mini programs that are uploaded to the blockchain. They are small and specifically created for a set action. They are integrated onto the blockchain and execute their specific command based on whatever behaviour was coded in.
This can be for anything! Games and their in-game marketplaces or non-gaming services like financial transactions.
For clarity, when we talk about smart contracts, we are referring to the Ethereum blockchain. While most people outside the world of technology might have heard of Bitcoin, there are many other cryptocurrencies. In this case, we are talking about Ethereum, the second-largest cryptocurrency market. It is often referred to as ‘Ether’ or ‘ETH’.
The contracts usually operate as any normal transaction. However, when executed, they use the pre-set commands to begin its set of actions. The contract isn’t bound to just send money, it can be programmed to do almost anything. As we said above, this could be used inside a game for in-game transactions of items or could be a traditional transaction in Fintech for example.
And thanks to the decentralized nature of blockchain, it ensures these transactions are secure as long as the contract itself is.
While blockchain is very secure by nature, it also means that things on the blockchain can’t be modified. Once something is on the blockchain, it is up there permanently. This is why we said that the blockchain is only as secure as what’s built onto it. If your contract is uploaded, it has to be bulletproof.
If not, it will be on the blockchain with its unique place and ‘block’. It will be accessible and if there is a weakness, it will no doubt be exploited.
This is why we recommend a full source code review before uploading. With our team, while verifying smart contract secure, white box testing is the only option. There must be a full check, from top to bottom, to ensure its security.
These programs are handwritten, and mistakes happen. But once it’s uploaded, that little mistake could prove fatal to your operations.
There is a frightening speed to the world of technology. Don’t let yourself get left behind and miss out on the potential of new and evolving ways of business operations. If you’d like to learn more about blockchain, get in touch with us and our Magic Media security team.