Ensuring Trust: A Comprehensive Guide to Blockchain Security Audits

Date: 28 May 2024

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In recent years, blockchain technology has been booming and many organisations worldwide have started implementing it to secure their applications. Industries like financial institutions, banking, food, gaming, health care, etc. are major users of blockchain technology. 

However, a blockchain network can have certain flaws that can affect the organisation and its security outcomes. 

Blockchain security audits are a great way to find the issues concerning security, compliance,  and operations. These audits evaluate the network and systems to detect malicious activities and prevent exploitation. 

In this article, we’ll discuss:

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What are Blockchain Security Audits?

A blockchain security audit is a step-by-step review of your overall system on a given blockchain network to detect and assess compliance risks, security vulnerabilities, operational dysfunctions, etc. These errors could be malicious and can harm the entire business environment. 

Blockchain security audits help you understand where the issues lie and let you resolve them quickly to secure your network. In addition to this, it ensures your organisation follows the rules, regulations, and protocols thoroughly to prevent attacks. 

Stats on Blockchain Security Audits

  • The Blockchain security market is predicted to expand from USD$ 3.15 Billion in 2024 to USD$ 58.86 Billion by 2032 with a CAGR of 44.20%.
  • According to a study, around $2.81 billion were lost in 2022 alone due to smart contract security hacks. 

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Why do you Need a Blockchain Security Audit?

Blockchain security audits are a secure way to detect errors in a blockchain network and review the systems and their internal workings. It’s an important procedure for every business leveraging blockchain technology. 

Here are the reasons why implementing blockchain security audits is beneficial: 

Document Integrity

Documents like smart contracts are being used in blockchain applications for quick and automatic execution of transactions. With blockchain security audits, you can identify vulnerabilities in your system and minimise the risk of security breaches. 

Vulnerability Reduction 

In the blockchain network, vulnerabilities can cause many problems, especially harming your security and stealing essential information. Blockchain security audits identify and resolve these vulnerabilities before they can cause any damage, preventing unauthorised access, and potential security breaches. 

Regulatory Compliance

Due to data privacy risks, regulatory compliance needs have become more stringent than ever. Therefore, you must comply with applicable laws and regulations. Blockchain security audits help ensure your organisation is in compliance with applicable regulations. This helps you build a legal and transparent environment in your enterprise's blockchain network. 

Blockchain Security Audit Cost

The blockchain security audit cost can start from $5,000 and go up to $50,000, depending on many factors, such as scope, complexity, compliance requirements, and team size. 

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Blockchain Security: Testing Checklist

1. Understanding Blockchain Architecture

Understanding  blockchain architecture is the first step to securing your blockchain network. Since blockchain is decentralised, it replaces a traditional server-based centralised architecture to offer greater privacy, stability, and security. 

Blockchain utilises cryptography and transparency to protect your digital assets in the network. Its basic components, including nodes, blocks, transactions, chains, and miners help you perform blockchain security audits effortlessly.

2. Detecting Threat Entry Points

Weak entry points within your organisation can allow attackers to access and interact with your digital systems and collect sensitive data. 

With regular blockchain security audits, you can identify these entry points and secure your organisation's data from threats. For this, build a threat model for your organisation so that everyone in the team understands and acts accordingly. 

In your threat modeling, you can include the following things:

  • Identify your organisation's objectives to maintain a security layer within it
  • Define your objectives to your team and let them follow each objective
  • Analyse vulnerable applications
  • Identify potential threats
  • Put strategies and countermeasures in place
  • Generate a report to know how it performs

3. Collecting Available Data

There could be weaknesses in your hardware, software, and network systems that a malicious actor can find and exploit. If you have not set strong measures or permissions to protect your sensitive data, attackers can access this information and damage your systems. 

Before that happens, collect information about those weaknesses and fix them. In addition, find data that anyone can easily access and secure it with advanced access permissions so that only authorised individuals can access it. 

4. Evaluating Smart Contracts

The smart contract contains rules, workflows, and functions. This ensures everyone in the organisation operates according to the contract and meets your business requirements. Blockchain security audits help you evaluate your smart contract by inspecting whether everyone performs as per the code. 

5. Establishing Objectives

Security testing is crucial for every business to detect vulnerabilities in a system and ensure data safety from attackers. 

For this, establish your audit objectives and prioritise workflow based on the degree of severity. Identify security loopholes in your systems and rank them according to how much risk they pose. Start fixing them one by one, ensuring you address the most critical issues first before they affect your business.  It helps you protect your business from data breaches and unauthorised access. 

6. Designing a Full Strategy Model

You will require a full strategy model to protect your business from attackers. This is one of the blockchain security audit best practices that help you prepare yourself for incoming attacks. To design a full strategy plan, define your business objectives, identify potential threats, and take a testing approach. It will protect your data and resources from attackers.

7. Ensuring Compliance Readiness

Ensure your organisation follows all the industry standards, legal commitments, and internal requirements. You can review your company policies, incident response plans, practices, and working nature to align your day-to-day work with proper rules and regulations. If you find any gaps in your compliance process, address them immediately to reduce the risks and protect your organisation from financial penalties and unwanted legal procedures. 

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A blockchain security audit is an important step towards securing your applications and network systems. It reviews the code continuously to identify any potential threats and protect your resources and data.

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