How to Perform a Blockchain Security Audit?

How to Perform a Blockchain Security Audit?

Blockchain auditing is a security technology that supports high-value transactions on the blockchain. The process involves using code analysis to identify any vulnerabilities in the system and fix any errors in those programs. A Blockchain security audit is a great tool to evaluate a company’s processes and ensure that records are as accurate as possible. While information from external sources is reliable, human error can still simulate logged transactions.

Unlike traditional databases, blockchains are immutable, so data processing is very precise. The role of the blockchain auditor is to mitigate the risks associated with the accuracy of digital assets. Using the blockchain as a database of transactions sounds like a good concept, but there are also risks to consider when executing this technology. The most important risk is compromised access to the private key, which can break the encryption.

Safety controls need to be arranged to protect private keys, but these efforts are just as productive as the implementation and consistency of procedures. Automatic smart contract analysis can decrease the cost and complexity of smart contract audits.

Main Types and Forms of a Blockchain Security Audit

Blockchain and smart contract auditing are evolving, creating new and effective ways to detect bugs and security threats. There are several main reasons for this:

  • The digital world is expanding rapidly, with new decentralized finance platforms popping up daily. As blockchain develops at a breakneck pace, finding a faster and more efficient way to audit becomes a priority.
  • Developers are searching for methods to launch the projects with maximum trust, and having a respected auditor mark a blockchain or smart contract benefits instill investor confidence.
  • Auditing is a specialized job, and as demand grows, companies realize how profitable they can be.

What about the three main forms of blockchain security audit?

  • Human Audit: The original form of blockchain audit performed by programmers and developers. It can be lucrative as some argue that good auditors can earn up to $400,000 in annual turnover from auditing smart contracts.
  • Auditing Firms: Since the auditing of cryptography and blockchain technology is so lucrative, it is not uncommon for specialist firms to begin to emerge. These companies rely on security teams to make the foundation, programmers, and specialized software go on. However, these companies are centralized and charge high fees, so blockchain and DeFi platform developers are willing to include them in any blockchain development project. However, since most blockchains are open source, hiring a centralized party for auditing should not compromise blockchain security.
  • Audit Software: To provide more cost-effective and efficient solutions, players are developing software that can perform audits on platforms, smart contracts, cryptocurrencies, and blockchains.

But each type is essential for the smart contract audit process, and sometimes it is better to apply all of them. 

How to Apply for Blockchain Audit Process?

To validate a blockchain, auditors must pursue a particular structure. For example, if an auditor or audit software starts without setting goals or objectives, it will be inefficient and waste resources, including money and time.

The reality is that even though the software is designed to conduct audits, human auditing is still a crucial part of the process and should not be ignored. Blockchain developers and security specialists will use static code analysis tools for a full audit and conduct certain stages.

# Aims of the Target Blockchain System

Auditing blockchain security in the wrong direction is worse than no audit. Therefore, always define audit objectives before starting the process to avoid falling into the non-directional loop of blockchain security audits.

The overall goal of security audits, blockchain or otherwise, is to determine security hazards in systems, networks, and technology stacks. You can also narrow this goal down to a few smaller goals related to different security domains and specific needs. Also, determine the action plan to be followed during the security audit. Pre-defined objectives and action plans will prevent the auditor from loading up on the audit and keeping your assessment on track.

# Designation of the System Components & Data

The second step is identifying the target system’s components and associated data streams. In addition, the audit team must understand the project, its architecture, and use cases. Inspecting test plans and test cases is also essential for a successful audit. Finally, when you validate a smart contract on the blockchain, you ought to close the original code version, which may ensure the transparency of the audit process.

# Identify Potential Security Risks

Blockchain programs contain nodes and APIs that express over private and public networks. They can be differentiated in the solution as they are the communication objects in the blockchain network. Associations should consider checking risks as implementation continues to evolve. Some potential crypto security risks in blockchain are related to data, recorded transactions, etc.

# Blockchain Security Audit Modeling

Threat modeling is one of the components of a blockchain security assessment. Threat modeling makes it easier to identify potential system security issues. To be precise, threat modeling can detect deception and data forgery. More importantly, it can remember denial of service attacks on blockchain systems. This step of the blockchain security audit also defines data manipulation.

# Development & Correction

The last stage in the blockchain security audit process is maintenance and repair. Exploiting the vulnerabilities discovered in the stages above indicated the harshness of the risk. Exploitation defines how efficiently it is to use exposure and how it behaves in a system. However, the fix involves fixing these vulnerabilities.

Final Words

Existing and potential benefits of auditing the blockchain networks testify to its need. Clients often look for reliable firms that can run the necessary security protocols and secure the cryptocurrency and the system from hackers. Such testing services check external and internal components, and the audit report provides detailed instructions for further action. Some tools allow you to do such an audit yourself, but each client should, at least before the first launch, trust the professionals.


What is the cost of Blockchain Audits?

Costs depend on many factors, including the type of check and the tools involved. However, the average price can vary between $5,000-$50,000.

What Tools can help to find Bugs and Security Flaws?

Tools are selected according to the type of verification chosen and depend on the object being verified, for example, a smart contract or an application. But the most common Audit Tools are Truffle, MythX, Rattle, and Mithril.

What are the most common attacks on blockchain technology?

The following attacks have become the most popular in recent years of Blockchain existence: 51%, Sybil, DDoS, DAO, and parity attacks.

What is a Blockchain Code Audit?

A Blockchain Code Audit is a systematic and structured code review of manually conducted blockchain development projects. The process usually applies extensive use of code analysis instruments.