The blockchain allows users to record transactions across a distributed network of computers. The server is secure, and transactions are permanent, making verification easy. Transactions are also conducted directly between users without needing an outside intermediary. A blockchain protocol will tell computers how to verify and aggregate transactions. In addition, the blockchain keeps a history of all transactions without users being able to change the data.
Cryptocurrency like bitcoin is the most standard type of blockchain technology. Many organizations use cryptocurrencies for large financial transactions. Some legal experts even allow their clients to pay for services with cryptocurrencies. Additionally, business and technology lawyers will no doubt encounter cryptocurrency or other technologies in some of their cases. Legal professionals’ interactions with blockchain include eDiscovery verification, tele-advocate services, medical records, healthcare databases, and smart contracts.
Since blockchain is highly secure and immutable, many people have called this technology “unhackable.” Unfortunately, recent incidents have shown that hackers can access blockchains in certain situations. It includes the following scenarios:
During the verification process, “miners” review transactions to ensure they are genuine. If one or more hackers take control of half of the mining process, the consequences can be highly damaging. For example, miners can create a second version of the blockchain, called a fork, in which certain transactions are not reflect. It allows miners to create an entirely different set of commerce on the fork and call it the genuine, albeit a fraudulent, version of the blockchain. Unfortunately, it also allows hackers to spend twice as much on cryptocurrency. These 51% attacks are more mutual on smaller blockchains because it is difficult for miners to gain meaningful control over more immense, more complex blockchains.
Sometimes there can be security flaws or errors during the creation of the it. For example, it may be more familiar with larger and more complicated blockchains. In this case, hackers looking for an entry point can identify vulnerabilities and attempt an attack. For example, it has happened with smart contracts that use a network to operate. Standard features of smart contracts include financial assistance in contract negotiations and automation of tasks. Lawyers may encounter intelligent contracts through internal use or handling client cases and issues in their practice. If there is a vulnerability in the network in which a clever agreement operates, hackers can steal money from users undetect because the fake activity is not reflected. Unluckily, since it transactions cannot be altered, the only way to recover stolen funds is to create a fork that all users recognize as the authoritative blockchain.
Many blockchain hacks have occurred on exchanges that allow users to trade cryptocurrencies. When security practices around the business are weak, hackers have easier access to data.
Recently, blockchain attacks have increased dramatically as hackers have discovered vulnerabilities exist. As of 2017, public data shows that hackers have stolen around $2 billion worth of cryptocurrencies. This recent activity makes it clear that, unfortunately, the blockchain is not tamper-proof, and users still need to be careful, especially when trading on the exchange. Therefore, legal practitioners who contact blockchain should stay informed about the risks and new solutions. Furthermore, before using intelligent contracts or trading on a business, you should learn about previous attacks and relevant security measures. However, it doesn’t seem like blockchain users should be too cautious as the technology is still very secure. Undoubtedly, the creators and admins will keep improving the security measures to reduce the hacking risk in the future.
Blockchain hacks have recently drastically increased as hackers have discovered that vulnerabilities exist. Since 2017, public data displays that hackers have taken around $2 billion in cryptocurrency.
Also Read: What is Ethereum? – Its work and More
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