When you approach a vending machine and insert a coin, you expect to receive a can of soda or tasty snack in return. The same thing happens when you use blockchain technology to exchange cryptocurrency for any service or vice versa. It’s called, a “smart contract,” and it’s expected that this process is automatic; nothing can happens to alter it. Well, the process itself remains the same, but the terms of the agreement can be mixed up due to hacking.
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Thus, instead of a can of soda, you might get cookies or chips from the vending machine because it receives a different command from the pushed button than for the drink the machine was supposed to spit out. Surely, that’s a best case scenario, as hacking smart contracts does not create simple challenges for you. If your business agreement is hacked in the same way, the consequences are more tragic than a Brazilian soap opera! Instead of a pack of tasty cookies, you receive a notification that you sent all your cryptocurrency to some lucky duck, and there is zero opportunity to contest this unlucky-for-you happening.
In fact, blockchain technology in the financial sector, especially smart contracts, has been created to exclude any third party to make it simple and safe. For the owners of an ICO business who operate with cryptocurrency on a daily basis, this process is genuinely priceless. At the same time, neglecting the issue of cybersecurity can lead to the unfortunate consequences defined above. If you want to save several thousand dollars on cybersecurity, you might actually lose millions! Here are some solid examples of how hacking into smart contracts damages a business.
Lack of cybersecurity can eliminate all the positive outcomes of using smart contracts and help some cybercriminal easily steal money from the business account. The German company DAO was the one that proved this by suffering an attack which resulted in the loss of $150 million for the business in 2016. It’s possible to determine that the bug took place exactly in the smart contact as Ethereum worked appropriately and conducted what was expected. The measures applied in the Dao case were rather challenging: The ETHs sent to the wrong receiver were frozen, but it was impossible to return them, only prevention of further losses.
In June, 2017, this case of hacking a smart contract occurred, and it resulted in the loss of $30 million for the Parity company. The the company’s contract is called the wallet.sol, and it was hacked. Plus, there were several more wallets at extreme risk of facing the same issue. Again, there was zero opportunity of returning the cryptocurrency to the original owner due to the lack of ability to cancel the operation in the blockchain technology.
The summer of 2017 was challenging for the cyber community because of hacking smart contracts. In July, a company called CoinDash faced an attack that cost $10 million. Moreover, about 2000 investors were the victims in this case as they sent their ETHs to wrong addresses.
Finally, in October of 2017, Etherparty announced that its smart contracts turned out to be vulnerable to attacks. The legitimate address of the company was replaced, and everything went through correctly. But, the terms of the smart contract were changed by hackers, and that made investors produce a fatal mistake.
All the above examples took place relatively recently, and that reveals this challenging fact: Neglecting cybersecurity and audits of smart contracts leads to humongous losses! That’s why cybersecurity companies like Hacken, that are oriented towards small and mid sized businesses, allow not only determining vulnerabilities, but also controlling your information systems and preventing phishing activities. This measure is not so costly as you might imagine. The world of white hat hacking is developing quickly due to this huge demand. You take care of investors who trust you with their money, and the specialists at Hacken ensure that your smart contract is secure. Thus, you won’t disappoint your investors and followers with a lackadaisical attitude towards their safety. This prevents the eventuality of sending their money to the wrong address due to the bad guys hacking your smart contract. It’s worth spending a little extra money on cybersecurity!