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How Safe Is Your Digital Currency

How Safe Is Your Digital Currency

Articles / 2018-09-06 14:30 PM

Smart contract presents an automatized, contractual agreement. The advantages of smart contracts are coming to be more obvious; some people indeed believe that a new kind of making an agreement is on its way to edge out human beings taking mediator positions.

This article is provided by the Vestchain Platform

As a consequence, a greater number of transactions is being conducted exactly with the help of smart contracts. As nothing can be perfect, the operation of any smart contract is marked with some shortcomings.

Many a man have stated that expandability is the biggest issue about smart contracts that do not let them spread at a full lick. Nevertheless, as we see it, in contrast with security expandability is not the main problem to focus on.

Why is the security of a smart contract very much in question?

Immutability is the distinctive characteristic of smart contracts that makes them that appropriate for their intended purpose. Immutability presupposes impossibility to amend a smart contract once it was concluded and activated.

On one side, this means no third party is able to interfere with them. On the other side, immutability may adversely impact the operation of a contract itself. Let us take the bug as an example. If after coding and activation of the contract there were bugs noticed it would be impossible to eliminate them and their presence in its turn means that the smart contract is open to attacks.

The DAO and Parity Wallet hacks may become striking examples of severe consequences of tiny bugs. Yes, smart contracts are automatized, but we should not forget that the systems are still run by human beings.

Any smart contract just like the ordinary one is concluded or coded in accordance with a number of complicated rules.

For instance, smart contracts must have capacities to register all terms and conditions in complete detail, conduct transactions real quick as well as to retain information in a convenient format that let to back it up. It is really easy to make serious or little mistakes as successful exploitation of a smart contract indeed presupposes numerous requirements to be met.

Developers are those people who take charge of designing and setting all the necessary features. The fact that a vast majority of laboring developers stay anonymous and in such a way, in fact, it is not possible to invoke responsibility of them. Understanding that, they can let themselves be less precise in fulfillment of their obligations as they understand that their errors will not be revealed at once but after they get their reward. Moreover, they do not make part of a team and that fully relieve them from any negative implications and thus responsibility if anything goes bad.

Negative Experience of Exploitation of Smart Contracts

16 June 2016, perhaps, the greatest hacker attack of all times of cryptocurrency industry took place. A hacker stole about $60 million from the promising DAO project. The hack became possible "thanks" to a recursive call bug. The attack was so impactful that the Ethereum cryptocurrency hard-fork became the only right choice for the DAO community. The only good thing about that disastrous oversight has become Ethereum Classic.

Just a year after there was "black July" for Parity Wallet platform. 30$ million were lost. As the bug was found in the multi-signature system the hackers' attack is also called "MultiSig Hack". The reason was the mistake in the code that let anyone trigger the public functions from the library. The attacker pretended to be the owner of the contract and just sent all the funds to his own wallet. But that was only the beginning of the Parity Wallet crisis.

4 months later one more catastrophe happened to Parity Wallet. They called it "The Parity Wallet Freeze". About 500 multi-signature wallets were hacked. The project suffered great losses. A number of top-level blockchain platforms were affected.

Safe Smart Contracts as a Guarantee by the Etherparty

The two attacks mentioned above have become the most disastrous but not the only ones. Taking into consideration that any currency systems have always been in danger we cannot afford ourselves any complacency when it comes to the security and safety.

The good thing is that the industry showed itself strong and resistant. It is ready to learn from the others' mistakes and to do the utmost to minimize risks. Etherparty, that has its headquarters in Vancouver, is one of the top smart contract platforms that concentrates its attention on the security issue. Its high-level security standards make the key to the success of its exploiters.

Etherparty presents blockchain software products that are developed so that they could make the generation of the smart contracts less complicated. The project works all over the world. There are three smart-contract based solutions proposed by Etherparty.

The first exists under the name Rocket. It has already been presented to the wide audience and constitutes a digital token and a software. The second was given a name Hero. It is made as a platform and just like a real hero aims to promote charity and make all the processes connected to digital finances in frames of it less complicated, but more transparent and secure. The last but not least is Saturn. It is a platform dealing with the supply chain administration of a blockchain.

It is important to note that before activating any smart contract Etherparty examines it carefully with a view to any possible breaches in the security system. For example, the Rocket was audited by two different external expert groups before its launch, so that users could be completely assured that no bugs were possible. Before that the Team put their FUEL Token under audit analysis, that was successfully made.

Moreover, Etherparty participates in the Vanbex Group, which is the Canadian consultancy of the highest level. The Group distinguishes itself as completely transparent about their campaigns and what is even more valuable about the make-up of the team that is going to maintain this or that project.

Coming to the conclusion we should say that no matter how much has already been done there is always a place for progress which is extremely important when it comes to finances. Blockchain and smart contracts are quite young and obtain enormous potential but to let it out we have to work hard on the security measures.

The question is why one has to go risky way if there is always a path that has already been checked and not by the same newcomers but by the experts who know their business. The answer is nobody has to.