Why Smart Contract Auditing Isn’t Enough
Smart contracts are used to control billions of dollars’ worth of digital assets and execute a vast array of agreements including electoral voting, ICOs and supply chain management among others. Considering that Ethereum and other blockchain platforms allow developers to access their services at a reasonable cost, further growth in the size and significance of smart contracts is investable.
Nonetheless, just like all other emerging technologies, smart contracts have their own share of challenges. In a smart contract your funds are the mercy of the code. Since there are no undo buttons or central authority to ensure everything is fair and clean, there is little you can do if things go south. Should someone exploit a vulnerability in the code, all funds can vanish in an instant!
Therefore smart contract audits to optimize performance and take care of any security concerns are indispensable. But one question remains: are smart contract audits enough? Let’s delve in and explore:
First, what is a smart contract audit?
Smart contract auditing is simply a scrutiny of the code used to underwrite the terms of a smart contract. This gives developers a chance to identify inefficiencies, vulnerabilities and potential bugs in the smart contract before it is deployed.
Usually, the audits are conducted by third parties to make sure that the code is inspected as exhaustively as possible. Depending on the budget and complexity of a smart contract, a company may opt to procure the services of a specialist smart contract team to conduct the audit.
So, are smart contract audits enough?
Clearly, smart contract audits alone are not enough. Smart contract auditing isn’t about writing code that is so watertight that it locks out all the hackers- the crypto sphere is known to have some of the best hackers in the world. It is more about catching dangerous bugs that would cause devastating effects if left in the smart contract.
Since smart contacts are immutable, it is very difficult to correct mistakes once the code goes live. And this is not the only problem. When a buggy smart contract suddenly begins to misbehave, the confidence of those looking to leverage on the benefits of Blockchain technology is severely eroded.
vulnerable code that leaves room for manipulation not only puts substantial amounts of money at risk of being stolen but also leaves the reputation of Blockchain technology in jeopardy. A good example is the DAO fiasco where a hacker exploited a weakness in the code and drained over $50 million from the DAO. Luckily most of the funds were restored through a hard fork.
Another example that illustrates the consequences of a bug left in a smart contract code is the Parity Wallet hack of 2017. In this attack, a malicious agent discovered a bug in their smart contract and manipulated it to gain exclusive rights to a multi-signature wallet. He then used the rights to transfer the funds to his wallet. Digital assets worth millions of dollars were stolen! According to Parity, the bug was missed during an internal audit. This demonstrates that while auditing can reduce potential attack surfaces and ensure that the code is in line with the best practices, it is not enough.
But what is the solution
Besides smart contract audits, you need to consider hack/theft alert systems. Exchanges, token creators, and crypto investors can benefit significantly from enlisting MonitorChain’s real-time surveillance that identifies security issues and potential vulnerabilities. Let’s find out how:
Ethereum token creators
Smart contract auditing and security measures play an important role in ensuring the safety of smart contracts, but they do not entirely eliminate the possibility of hacks. MonitorChain protects you by sending you instant alerts for suspicious activity that violates the terms of your token contract and major holding address conditions. The alert system is created as an Ethereum oracle to enable you to trigger freeze functions automatically or notify exchanges to suspend trading.
Crypto traders and investors
No one wants to fall for a marketing manipulation trick such as the aftereffects of a token hack or theft. Sometimes trade volumes may increase dramatically, and prices fluctuate drastically in seconds. How can you tell whether this is an organic movement based on real news or a result of a hack? MonitorChain comes to your aid with instant notifications, so you know for sure that you are making the correct decision.
The first place thieves and hackers go to after they steal or exploit vulnerable smart contracts are the exchanges. Your exchange could be at risk of becoming a dumping ground for counterfeit and stolen tokens. MonitorChain provides you with detailed reports as soon as suspicious activities occur. And you can take timely action to keep your exchange safe by suspending transactions involving the tokens in question. Since MonitorChain is an on chain Ethereum based feed, it can be integrated directly into your smart contracts and management system for automatic responses.
The security of smart contracts is not an issue to be taken lightly. Significant amounts of investors’ money are at stake here. Funds can be lost in the blink of an eye should malicious actors exploit a code vulnerability.
Smart contract audits come in handy in identifying vulnerabilities and potential bugs before the code is deployed. However, the auditing ecosystem yet to mature, and at the moment lacks the refinement that it needs to work effectively.
Therefore, leveraging on hack and theft alert system such as MonitorChain in tandem with smart contract audits can go a long way in enhancing the security of smart contract and boosting confidence in the entire Blockchain sphere.