Blockchain technology is often touted for its great security in preserving transaction records. However, blockchain isn’t impenetrable. After all, a line of incorrect coding or a small computer network backing the blockchain could lead to unwanted transactions, meaning companies must assess and be aware of any risks in their blockchain-based software, experts said.
“With anything involving software, anything involving anything online, it’s always an IT security risk,” said Phillips Nizer partner and former New York state Department of Financial Services deputy superintendent Patrick Burke. ”So while the blockchain itself is generally pretty impregnably accept for the ’51% attacks’, the software written around the blockchain is as susceptible as any other software.”
Indeed, news reports have documented a number of hacks of blockchain-backed cryptocurrencies and smart contracts. In January, for instance, hackers breached an adult entertainment company and stole $38,000 worth of cryptocurrency after it exploited an error in its smart contract.