Do you want to know what are the solutions to smart contract security challenges? If so, then keep reading this article.
Since the inception of blockchain technology, smart contracts have revolutionized the digital world. These execute automatically, and if we use a peer-to-peer network, there are high chances of increasing equity. It all depends on the quality of smart contracts; the better the quality, the lesser transaction costs will be. When there are vulnerabilities in them, smart contract auditors can help you eliminate security breaches so that you don’t have to live under the constant fear of malicious hackers turning them into expensive exploits.
There is a glorifying side of smart contracts. On the flip side, you will also come across some considerable challenges. Like the other blockchain users, you would also seek solutions to eliminate the challenges. This is what we will discuss smart contract security challenges in the blog.
Also, you can check: 6 Tools To Protect Your Computer From Hackers.
Use Cases Of Smart Contracts
Almost every industry is fully geared to face and embrace smart contracts as a potent tool that will increase accuracy and reduce fees for most agreements. Sectors like logistics and shipping, financial services, insurance, energy, charities, healthcare, agriculture, etc., are trying their best to adapt to smart contracts.
However, they are still far from ubiquitous – from the code intricacies to exchanging tangible goods; there is a need to find the remedy for these issues to envision the journey of smart contract development on a global scale.
Let us ponder the main smart contract security challenges and propose solutions to those problems.
Primary Challenges Associated With Smart Contracts
These are some of the major smart contract security challenges.
Security and privacy
This concern has been a part of research and development since the hack of 2016. In that hack, approximately $60M worth of Ether was drained from the DAO, and it was surely the case wherein the hacker exploited the vulnerability in the code. Smart contracts utilize distributed ledger technology on blockchains. Nature-wise, they are publicly readable and open-source. So researchers and developers always find ways to maximize security without increasing the costs.
Smart contract auditing has solved many problems for users, freeing the contracts from early vulnerabilities and saving them from later hacks and malicious attacks. Within a peer-to-peer network, there are always possibilities for event-ordering bugs and reentrancy bugs. Hackers inject malicious data into them to get a desirable outcome.
To solve this smart contract challenge, these are the possible solutions:
- Hyperledger blockchain project
- Increased use of cryptography
- Hybrid solutions for data storage
Legal Challenges
Smart contracts enable cross-border services, finances, and goods transactions while removing the need for an intermediary or central authority. However, even if they abide by the rules and regulations of different countries, it is a bit skeptical that those rules will be respected worldwide.
The immutable nature of smart contracts is also a major concern– there is no way to undo an agreement once it is made. Even if the law changes later, it will also remain the same. The only solution would be to abort the smart contract and create a new one, which is costly.
Talking in terms of data, too, there’s an issue. For legal contracts like marriage certificates, it is possible to digitize them. Similarly, for the industries that work on quantifiable data, like agriculture or finance, coding them is simple. However, not every industry works the same way.
People need to be more aware of coding to sanctify smart contracts legally. Judges who give their verdicts on digital cases need to learn smart contract language.
Relying on Oracles
“Oracles” are data sources that smart contracts depend on to check if any criteria in the contract have been met. For this, they are considered the weakest link for manipulating the contracts. Just in case the hackers hack a node in the contract’s blockchain, it is very easy to log falsified data. Then this becomes immutable in the distributed ledger, changing the outcome of the smart contract.
Usability Challenges
The design of the smart contract and its specific applications are very intricate. Developing them is a hefty task requiring specialized software engineering skills.
With the advent of new technology, developers now need business knowledge and get a hand on non-traditional programming languages. Together with this, they should also comprehend formal networking and cryptography.
Impact Challenges
The issue of scale comes last. Currently, Visa can process about 24,000 transactions per second. The fastest blockchain for smart contracts, Ethereum, can only process 14 transactions per second. The speed of information sharing on the blockchain must be increased, security must be strengthened, and its accessibility to both coders and the general public must rise to boost the influence and effectiveness of smart contracts in our society.
Final Thoughts: Smart Contract Security Challenges
So many snags with smart contracts currently have contributed immensely to complicating their usage, research, and development behind smart contracts is massive. With each passing year, it is increasing, and this is how more effective solutions are being served on the platter to eliminate all the smart contract challenges.
Thus, we can now see the research gaps filling up and technical challenges resolving. However, there are still some challenges that are yet to be addressed. Let’s see what all unfolds for the blockchain space community this year.
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