Blockchain 2024: Security in the Era of Bitcoin ETF

12 Jan 2024

Blockchain Security Forecasts: Between Risks and Innovations

The approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) on 10 January 2024 marks a significant moment in the history of cryptocurrencies and blockchain technologies. This breakthrough not only confirms the long-term prospects and legitimacy of Bitcoin in the global financial market but also opens new horizons for investors and market participants. With the epochal approval of spot Bitcoin ETFs and the bullish sentiment in the markets, the importance and relevance of security issues in blockchain technologies are increasing.

Previously, we forecasted security issues for blockchain technologies in 2024. Continuing the theme of blockchain security and based on the opinions of authoritative experts and analysts, today’s material focuses on current and future vulnerabilities and risks in Bitcoin and Ethereum, the role of artificial intelligence in blockchain security, and the issue of Telegram bots.

Bitcoin and Ethereum: Vulnerabilities and Risks

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Both major cryptocurrencies, Bitcoin and Ethereum, are at the center of attention not only because of their popularity but also due to a range of security-related issues. These issues cast doubt on the reliability and stability of these cryptocurrencies. Let’s consider some examples of current security issues with Bitcoin and Ethereum.

Recently, Bitcoin drew attention due to several critical vulnerabilities found in the Lightning Network. These issues led to some developer attrition, including those who were at the forefront of Bitcoin Core which is one of the most authoritative teams in the crypto community.

Additionally, there are issues with the Ordinals project and BRC-20 tokens. Ordinals and BRC-20 can spam Bitcoin’s mempool, potentially slowing down transaction validation in bull market conditions. Given this complexity, it is not ruled out that Bitcoin Core may consider censorship to prevent such situations.

It’s also worth noting the risk related to major mining pools Foundry and AntPool, jointly controlling 54% of the Bitcoin network hash rate. This creates a significant likelihood of centralization and possible attacks.

In the context of Ethereum, security issues also remain relevant. The centralization issue affects this blockchain platform as well. There is a threat of staking centralization due to coin concentration in the hands of Lido Finance. If one player has 32-33% of all coins, there is a risk of compromising the Ethereum network, especially with the increase in Lido’s share due to hype projects. Such a scenario could lead to complete control of the network by a single organization and to the risk of misuse.

Advantages and Disadvantages of Artificial Intelligence in the Functioning and Security of Smart Contracts

AI

Examining the progress that artificial intelligence brings to the field of ensuring the security of smart contracts, let’s consider the associated advantages.

Artificial intelligence effectively aids in ensuring the security of smart contracts by identifying vulnerabilities, preventing potential attacks, and ensuring overall reliability.

The integration of artificial intelligence makes smart contracts more adaptive and intelligent, enhancing their ability to adjust to changing conditions. This approach gives contracts flexibility and increases their efficiency.

In the role of “legal analyst,” artificial intelligence actively participates in monitoring and compliance with legislation, reducing the risk of legal disputes and associated sanctions.

The analysis of user biometric data becomes particularly important in the digital era. Artificial intelligence successfully ensures the legality and security of this data in the context of smart contracts.

The ability to respond to cyber attacks in real-time gives artificial intelligence a crucial role in enhancing the effectiveness of cybersecurity mechanisms.

It should be noted that integrating artificial intelligence into blockchain technologies provides extensive perspectives in ensuring cybersecurity and expanding functionality. However, we cannot overlook a range of disadvantages associated with the use of artificial intelligence in blockchain.

Predictive scenarios suggest that the use of artificial intelligence in fraudulent schemes will grow exponentially. In this case, cybersecurity may struggle to effectively cope with such rapid changes. It is not excluded that by the end of this year, a scenario may emerge where artificial intelligence, on the side of malicious actors, breaches a protocol created using neural networks, and a third neural network, within security analysts, conducts its own investigation.

The realm of superficial audits of smart contracts and decentralized finance (DeFi) platforms is also under scrutiny. For example, the analytical company CertiK offers a scanner that conducts audits of smart contracts for the most well-known vulnerabilities at a relatively small cost. Some projects prefer such superficial checks, which may lead to increased threats. Therefore, we encourage you not to rely on audits of this kind and recommend opting for detailed and comprehensive audits aimed at identifying the most subtle vulnerabilities in smart contract code.

Additionally, as networks not using the Ethereum Virtual Machine develop and new programming languages for smart contracts emerge, difficulties in conducting quality security audits, especially automated ones, for these smart contracts increase.

Vulnerabilities in the code will remain inevitable, and many of them are discovered by hackers during test network stages, later exploiting these vulnerabilities in main networks. It is possible that this process will also be automated by cyber criminals with the involvement of artificial intelligence.

Attention should be given to large cross-chains with a significant number of smart contracts, as substantial resources are required for their maintenance, audits, and updates.

Prospects for the Security of Telegram Bots

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Given the high demand, the use of Telegram bots continues to pose a challenge. According to experts, this forecast is justified by the fact that this system is entirely centralized and susceptible to the risk of hacking. Even if a user retains a private key, the developer controls the bot.

Furthermore, the use of Telegram bots becomes a source of attractive prospects for malicious actors exploiting users’ greed to their advantage. The result is the emergence of phishing sites and fake channels conducting airdrops, constantly attempting to gain access to wallets.

In conclusion, our company is ready to offer you a full range of services to ensure the security of your blockchain projects. Whether it’s smart contract audits, cybersecurity consultations, or the development of strategies to protect against cyber threats, we guarantee a high level of professionalism and an individual approach to each client. By reaching out to us, you not only receive services but also a partner committed to the sustainable and secure development of your business in the world of blockchain technologies.

Stay tuned for the latest news and updates on our blog, and follow us on social networks to stay informed about current events and be prepared for new challenges.

If you have security questions regarding Web3 and blockchain, please contact us for a free consultation.

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