The importance of cyber security is a number one concern for all types of businesses. Not to mention finance and blockchain on the whole. Blockchain technology powers up a number of industries today, like fintech, crypto, healthcare, etc., and is starting to get its foothold into several others. Being the backbone of these capital-rich industries, blockchain has garnered the attention of hackers. Additionally, security issues in blockchain applications also arise due to improper implementation and maintenance of blockchain apps and the spread of quality penetration testing services. A recent survey has shown that blockchain hackers stole more than $3.8 billion in just about 125 attacks. Too much to lose because of security gaps, don’t you think?
The hype surrounding the recent rise in the price of Bitcoin has led to the popularity growth of cryptocurrencies. Industries such as Fintech, Payments, and Banking are often at risk of hacker attacks to obtain personal data such as emails, credit card numbers, etc., to steal funds in the first place. To avoid such situations, we suggest considering such a type of protection of computer systems as pen testing.
A penetration test (or just pentest) is a kind of a simulation of a cyber attack on computer systems, mobile applications, and web applications. It is conducted in order to check the security of the whole system. A penetration test helps to find out how vulnerable it is to hacker attacks.
In simple words, pen tests help to assess how effortless it is for hackers to acquire access to system characteristics and data, determine the possible number of threats, and also analyze all possible negative consequences for the company from implemented attacks. In addition, penetration tests allow you to take preventive measures to minimize risks. Many companies use pentests as a training tool for their information security professionals.
How is block pen testing carried out?
There is no need to start a debate over the significance of such security measures for blockchain. The meaning of blockchain penetration testing is the following: a security assessment process that ethical hackers or security professionals perform in order to test the security reliability of a blockchain-based solution or application.
Blockchain penetration testing primarily aims to identify vulnerabilities and security holes and detect misconfiguration errors in the solution. By performing blockchain penetration testing, organizations gain insight into the overall security of their blockchain security and allow them to address potential weaknesses in their blockchain-based solutions or applications.
To make it easier to understand, we have divided blockchain penetration testing into three phases that are as follows:
Phase 1
Information Collection and Threat Modeling
This phase is when you can comprehend and examine the business and functional requirements.
This phase includes:
- Understanding the blockchain architecture
- Finding threat entry points within the organization
- Collecting publicly available data on potential exploits
- Assessing the business logic of smart contracts
- Setting goals for security testing
- Developing a comprehensive testing strategy
- Checking readiness for compliance
- Setting up the test environment
- Generating test data
Phase 2
Testing and Discovery
At this stage, you can use the data obtained in the first phase to actively test your blockchain to determine its level of development according to the best practices and industry recommendations.
This phase includes:
- API security testing
- Functional testing
- Automated and manual blockchain security analysis
- Static and dynamic blockchain testing
- Network vulnerability assessment
- Application vulnerability assessment
- Blockchain integrity assessment
- Documenting test results
Phase 3
Exploitation
In this phase, the goal is to exploit any weaknesses or loopholes in security found in the discovery phase. It is often done manually to eliminate false positives. The exploitation phase also includes extracting data from the target and maintaining persistence.
This phase includes:
- Testing for security weaknesses and vulnerabilities
- The exploitation of security weaknesses and vulnerabilities
- Network penetration testing
- Web application penetration testing
- Social engineering attack
- Review and document discovery
Major Crypto thefts as proof of the necessity of a pen testing approach
First things first, all attempts by hackers to steal from blockchains like Bitcoin, Ethereum, Cardano, or Litecoin have failed. The networks showed a high level of protection each time.
However, in 2019, hackers managed to steal $300 million worth of cryptocurrency. For example, in January 2019, the crypto exchange Cryptopia lost all digital assets due to security issues. The lawsuit is still ongoing, and the exchange itself is unavailable. New information about the progress of the investigation regularly appears on the website. The Bithumb crypto exchange became the next big platform that was heavily affected by hackers. Cybercriminals managed to withdraw $31 million in EOS and Ripple cryptocurrencies from this exchange. That is the second major hack and drain of digital currency from this exchange since 2018.
In 2019, this list was supplemented by one of the largest crypto exchanges, Binance. In May 2019, hackers stole more than 7,000 bitcoins from a hot wallet, acquiring access to API keys and 2FA codes, which was equivalent to $40 million at the time. For the exchange itself, the losses were not so significant because they amounted to only 2% of the total storage. The exchange quickly compensated users for losses. But the attacks on the stock exchange did not end there. Later, an anonymous user organized a drain on 60,000 verified exchange accounts and demanded a ransom of 300 bitcoins for them.
What do we conclude?
Blockchain reps and crypto market players understand that until the issue of cyber security is fully resolved, you should not expect the mass distribution of cryptocurrency. Moreover, it makes no sense to wait for large investors to invest in cryptocurrency. After all, the easier it is to hack exchanges and wallets, the less secure the system is, the more risks and fewer guarantees there are – accordingly, fewer people want to invest. Any fully-fledged security system always involves a set of measures.
What are the benefits received thanks to penetration testing?
- you gain confidence in tomorrow;
- you no longer need to negotiate with clients and evade auditors;
- you get a new solid status – successful completion of the pentest;
- it helps you find and fix vulnerabilities in your product or network before cybercriminals do;
- in the eternal struggle between good and evil, you will win a decisive new victory over global cybercrime.
