A smart device that uses blockchain technology is installed in a Longjing tea plantation in Hangzhou, Zhejiang, allowing consumers to track the origin and quality of the tea. (Photo by Long Wei/For China Daily])
Analysts have called for security systems and industry standards to underpin the sustainable development of blockchain applications, as loopholes in the technology could bring about huge financial losses.
Blockchains are digital, decentralized and continually updating public ledgers of information, and the technology has been applied in many fields to record data securely.
Related parties need to come up with industry standards as soon as possible, said Deng Huan, head of Baimaohui.net, a Beijing-based research body focusing on blockchain technology, in a warning about the risks that could arise from such applications.
“At the same time, blockchain tech companies need to ramp up their efforts to ensure the safety of their businesses, as losses caused by security breaches have risen exponentially since 2017,” Deng said.
Between 2011 and April 2018, security incidents involving blockchain applications globally saw as much as $2.86 billion in losses, according to a report released by Baimaohui.net. For January-April period, the damage caused by such incidents amounted to $1.9 billion globally.
In April, security loopholes in Beauty Chain, a blockchain platform developed by a Chinese company and “dedicated to the beauty ecosystem”, caused panic among many industry insiders. The fatal bug in its smart contract－the coding that allows transactions to take place on the blockchain－led to a loss of 6.4 billion yuan ($967 million).
Yu Kequn, director of The National Research Center of Information Technology Security, said blockchain technology is still in its nascent stages, and risks might arise not only from external factors, but also from internal attackers.
“Due to the decentralization of the blockchain, its applications are gradually broadening. Systems exposed in the public chains cannot be shut down, and bugs are extremely difficult to fix,” Yu said. “As blockchain is evolving into a technical infrastructure service, serious security problems would occur once something goes wrong with it.”
Yu said its security will determine the future of blockchain technology. “Only by ensuring the stability of blockchain can we enable the technology to become mainstream. We must pay much more attention to security issues.”
Experts said a favorable security ecosystem should be set up to underpin the development of blockchain technology, and the process of building the environment needs to balance the relationship between technological development and network security.
Li Bin, assistant director of The China Information Technology Security Evaluation Center, said blockchain security issues require a laser focus, such as ensuring the stability of the underlying algorithms, reinforcing system vulnerabilities, protecting infrastructure, and ensuring the security of the application environment.