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MIT warns again of blockchain security risks in upcoming report

MIT warns again of blockchain security risks in upcoming report
An upcoming
report from the Massachusetts Institute of Technology (MIT) will state that
publicly reported losses by cyberattacks against blockchain systems since 2011 has
exceeded $1 billion.

The finding
appeared in an op-ed
for the Wall Street Journal written by Stuart Madnick, professor of
information technologies at the MIT Sloan School of Management. Madnick noted
the upcoming study would analyse 72 cases of publicly reported blockchain system
security breaches.

The study
comes after an article appeared on MIT Technology Review in
February , warning that the purportedly ‘unhackable’ blockchains were
getting hacked. The article noted the January case where Ethereum Classic was
suspended from Coinbase after irregularities to the tune of more than $1
million were spotted.

Madnick gave
the analogy of splitting the atom as defining the difference between the
concept of blockchain and the system it resides in. Banks are technically made
of atoms, but you don’t have to split the atom to rob a bank. Blockchains can
be hacked without having to ‘crack the chain’, as he put it.

The piece
explored various stories which exemplified the instability with regards to
blockchain technologies and the difficult approaches to security thus far.
Regarding the former, Madnick noted his theory that “the easiest way to make
money with a startup is to put ‘blockchain’ in the company name.” Regular readers
of this publication will know that this craze did not just affect startups; at the
start of 2018 Long Island Iced Tea Corp changed its name to Long Blockchain
Corp. Nasdaq put
a stop to the scheme six months later.

For the
latter, Madnick cited the
story of QuadrigaCX earlier this year as symptomatic. The Canadian cryptocurrency
exchange was unable to access a reported $250m CAD in funds after the sudden
death of chief executive Gerald Cotton, who took with him the only passwords to
the company’s vaults.

“The bottom
line is that while the blockchain system represents advances in encryption and
security, it is vulnerable in some of the same ways as other technology, as
well as having new vulnerabilities unique to blockchain,” concluded Madnick. “An
important notion that our research is intended to dispel is that blockchain
technology can protect data from misuse. In fact, human actions or inactions
still have significant consequences for blockchain security.”

You can read the full piece here.

Interested in hearing more in person?  Find out more at the  Blockchain Expo World Series , Global, Europe and North America.

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