Ultimate Guide to Blockchain Security

UTC by John Caroline · 7 min read
Ultimate Guide to Blockchain Security
Photo: Shutterstock

The consistent surge in cyber-attacks has triggered concerns for blockchain security. Here is all you need to know about blockchain security to help you leverage it and stay safe.

Blockchain technology has soared greatly in adoption as people continue to leverage its numerous use cases to maximize their income. However, it appears that users have paid less attention to its vulnerability, meanwhile, bad actors have their eyes fixed on the blockchain weaknesses to manipulate the system for their personal gain.

Over the years, the industry has seen a continuous surge in the rate of cyber attacks, this causes people to panic about the security level of every new innovation within the blockchain space. Even as the exclusive use cases of blockchain continue to attract the interest of many, it doesn’t silence concerns about how safe and reliable the blockchain infrastructure can be.

In a bid to help concerned users and enthusiasts to investigate blockchain security, what it is all about, and understand how the blockchain provides security, we have provided a guide to enlighten you better on blockchain security.

Blockchain and Its Types

To start with, let’s understand what blockchain is and some of its basic use cases. Blockchain is a distributed ledger technology (DLT) whose design and mode of operation induce trust and confidence in an environment. Specifically, blockchain is a decentralized ledger system that is duplicated and distributed across a whole network of computer systems. This innovation adopts a structure of data that contains inherent security qualities.

The blockchain infrastructure is often used to provide information access to all designated nodes or members of a computer network to enable them to record, share, and view encrypted transactional data on their blockchain. Blockchain is often classified into two types, public blockchains which are also known as permissionless blockchains, and private blockchains which are often regarded as permissioned blockchains.

  • Public blockchains

Public blockchains obviously are the public kind of blockchain and they majorly focus on participation and transparency. Public blockchains as mentioned earlier are also regarded as permissionless blockchains simply because they can be joined by anyone provided they have an internet connection. Users of public blockchains can keep their details discreet from the eyes of the public as the blockchain is operated anonymously.

Every user of the permissionless blockchain is given a public key that ushers them into performing activities on the blockchain. Likewise, this public key is often associated with the name of the users, this helps Blockchain to fulfill its purpose of transparency.

Public blockchains facilitate decentralization through crypto-economics, which helps the system to ensure cooperation all through its network of distributed ledgers. The technology takes a whole community of nodes to operate, as users must verify or validate any information that’s added to a block to ensure transparency, adequacy, and uniformity.

  • Private blockchains

Unlike public blockchains, private blockchains can not just be joined by anyone as it requires permission. Hence, being a permissioned blockchain that places restrictions on its accessibility, it allows users to verify and record a piece of information in a block with not much stress.

More precisely, any permissioned users of a private blockchain can verify and view personal information recorded in the blockchain. Notably, the private blockchain is often used by businesses or organizations considering the design it employs.

Private Blockchains are considered to be more secure than public blockchains because they involve more access control, and are often operated by a limited number of users. However, the blockchain is also vulnerable to malicious operations from internal actors, hence it is not completely resistant to cyber-attacks.

Blockchain Security Overview

Blockchain security is a comprehensive risk management system for blockchain technology that incorporates assurance services, cybersecurity frameworks, and proper solutions to mitigate the risks of fraud and cyber-attacks.

Apparently, blockchain networks are kept safe via the implementation of cybersecurity frameworks, security testing methodologies, and secure coding practices. These have proven to be possible mechanisms that can help to protect a blockchain solution from online fraud, breaches, and other cyberattacks.

No doubt, there is no financial/data platform that is void of security issues, hence the blockchain system cannot be an exception. Although it may not be easy to breach the security of blockchain technology, it is important that blockchain technology is not perfect, hence it is vulnerable to certain risks of cyber threats.

Malicious actors who possess massive amounts of computing power in the case of proof-of-work blockchains or of existing tokens for proof-of-stake (PoS) systems can have their way through blockchain solutions. However, there are possible preventive measures that can be taken to help users gain an edge over cyber threats poised to blockchain solutions, all thanks to the blockchain security system.

Blockchain Security Threats

As mentioned earlier, blockchain technology is susceptible to a number of cyber threats, some of which includes: phishing attacks, code exploitation, routing and Sybil attacks, stolen keys, and a few others.

To explain a few of these cyber threats, phishing attacks are one of the oldest hacking attempts in the tale of blockchain technology. It is a situation where a malicious actor makes deceptive efforts to get sensitive information or data from you by disguising themselves as a trustworthy source. Apart from the blockchain industry, users of traditional financial systems have also fallen for phishing attacks on many occasions. This action is often carried out via text messages, emails,  and even phone calls.

Code exploitation, on the other hand, is when a cybercriminal who happens to be a particular blockchain user spots a loophole in a blockchain’s software and maliciously exploits the weakness for his personal gain.

Meanwhile, routing attacks are another form of malicious scheme, cybercriminals deploy to break the security of blockchain solutions. This type of attack often comes in a few forms, meanwhile, the most common way it is used is via denial-of-service attacks and man-in-the-middle attacks. While using routing attacks to breach blockchain security, cybercriminals essentially lurk on a weak network when a permissioned blockchain user is on. In this case, the permissioned user has no idea the information they’re adding to a  blockchain or verifying in a blockchain is being monitored and potentially compromised. This eventually results in a critical cyber attack and users tend to lose their funds.

Conclusively, the act of stealing keys is another common way to break blockchain security. As said earlier, every blockchain user is offered private keys which represent their unique identities, these keys are the only tool they have to access the blockchain network and perform activities on the blockchain. Now imagine what happens when these keys manage to enter the custody of a malicious actor. The truth is when in the wrong hands, a cybercriminal can attempt to alter information in a blockchain under a permissioned user’s key. Hence, the funds of users are poised to risk being frauded.

Best Practices for Building Secure Blockchain Solutions

Blockchain solutions are vulnerable to a lot of cyber risks. In order to curtail situations of fraud in the blockchain industry, the following are some best practices needed to build secure blockchain solutions.

Businesses and individuals who intend to build a secure blockchain solution should;

  • First of all, define and enforce endorsement agreements based on business contracts.
  • Ensure that identity and access management (IAM) controls are activated to handle data access in the blockchain.
  • Execute suitable tokens that facilitate the performance of users’ authentication, verification, and authorization.
  • Make sure that identity keys are securely stored so that they cannot be easily stolen.
  • Use privileged access management (PAM) solution to secure blockchain ledger entries after suitable business logic.
  • Secure sensitive information with privacy-preserving infrastructures.
  • Prioritize the implementation of multi-factor authentication.
  • Maintain strong cryptographic key management.
  • Conduct a consistent vulnerability assessment and penetration testing (VAPT) on the blockchain.


Blockchain users who intend to build a secure blockchain solution should take into serious consideration the practices highlighted in this article. They should ensure to deploy the blockchain technology in a secure, resilient infrastructure.

It has been discovered that poor underlying technology decisions made by businesses and individuals are a major contributor to blockchain insecurities. The vulnerabilities are what result in data security risks that endanger the data and information of users, thereby ultimately leading to loss of funds.

When general efforts are made to exhibit these practices, the blockchain space will become a safer ecosystem for users.



What is blockchain?

Blockchain is a decentralized ledger system that is duplicated and distributed across a whole network of computer systems.

How safe is blockchain?

Blockchain offers safe custody of data considering its design. Also, the blockchain networks are kept safe via the implementation of cybersecurity frameworks, security testing methodologies, and secure coding practices.

What are the types of blockchain?

The types of blockchains are specifically categorized into two forms which include private blockchains and public blockchains.

What’s the difference between public and private blockchains?

Public blockchains are permissionless, that is they place no restrictions on user access, hence anybody can access a public blockchain provided they have an internet connection.

Private blockchains, on the other hand, place restrictions on their accessibility. In other words, only users who are permitted can access a private blockchain.

How does security differ depending on blockchain types?

Blockchain security differs depending on blockchain types as the public and private blockchains control access to the network in different ways.

What are the risks blockchain is facing?

Some of the risks blockchain is facing include phishing attacks, code exploitation, routing and Sybil attacks, stolen keys, and a few others.

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