Smart Contracts and Security


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Automatic fulfillment of the conditions prescribed in SCs and complete autonomy from external factors, which entails getting rid of subjectivity when evaluating a particular event, all of this allows us to classify smart contracts as effective business tools, even in the legal aspect.

Their execution is always subject to strict program logic, there is no need for intermediaries, and the fulfillment of the conditions for the event stipulated in the contract always leads to the execution of the transaction.

All these factors contribute to the fact that a smart contract saves all participants from the need for documentary support in hard copy, as well as from the use of unsafe data exchange methods. The only disadvantage of smart contracts is their potential vulnerability. That is why, when creating an SC, developers should pay primary attention to information security issues. And first of all – the quality of the program code.

Typical vulnerabilities of smart contracts

The web architecture, which uses open networks and the possibility of partial access to servers, is critical to client software vulnerabilities. Smart contract, which is also represented by software code, is no exception, although it has their own specifics. In general, there are three categories of vulnerabilities characteristic of this type of project:

  • programming errors. The lower the qualification of the programmer, the higher the probability of making mistakes either in the syntax of the code, or when using unoptimized or undocumented functions. These errors can become the target of hackers;
  • errors in the implementation of SC architecture related to the specifics of distributed networks. Such infrastructure mistakes can even be made by experienced programmers if they do not have enough experience in blockchain;
  • errors in the implementation of the project logic. Here, vulnerabilities can relate to both the legal aspect and programming. Thus, the development team should have both qualified programmers and specialists in a field they are working in, and they should be able to communicate with each other in the same language;
  • we also note the internal vulnerabilities typical for specific programming languages used in smart contract development. The exploitation of such vulnerabilities allows you to change the logic of execution of the algorithm embedded in SCs;
  • vulnerabilities at the level of providing a consensus mechanism. These are the most specific errors related to fundamental ones since it is consensus that underlies the processing of transactions and the recognition of blocks added to the blockchain as legitimate.

And this is an incomplete list of the dangers that smart contract code may contain.

How to deploy a secure smart contract

Obviously, we can talk about guaranteed security only in the simplest cases. And for a complex project, a set of measures, both technical and organizational, is required.

To neutralize the threats arising from programming errors, it is necessary to ensure that the following conditions are met:

  • there is a description of the process of developing a smart contract, including its placement in a distributed network;
  • involvement of programmers with appropriate qualifications and experience in the implementation of the project;
  • detailed algorithmization of business processes, again taking into account their functioning in the blockchain;
  • ensuring the structural modularity of the code, including the functions and procedures used;
  • Make sure that when standard libraries are included in the code, only their current versions are used (old ones may contain vulnerabilities, and the older the version, the more of them);
  • definitions of procedures used for detecting and correcting errors in the code;
  • ensuring automatic blocking of SC code execution when algorithmic errors occur;
  • inclusion of software mechanisms in the smart contract algorithm that implements the possibility of stopping it;
  • creating work regulations on product testing;
  • keeping a log of detected errors, as well as a log of changes in new versions of the smart contract code.

To eliminate the second type of error related to the features of the blockchain architecture, it is necessary to adhere to the following recommendations:

  • to analyze the consensus algorithm launched to validate the transaction entry in the registry, paying special attention to its durability;
  • to study thoroughly the features of the programming language used for a particular blockchain;
  • to ensure that the smart contract code contains timestamps, especially in critical blocks;
  • check the program for resistance to denial-of-service vulnerabilities.

The list of measures taken to neutralize errors in the logic of SCs functioning:

  • preparing documentation at the level of detailed specifications for the implemented smart contract;
  • SC deployment logging;
  • analysis of compliance of the smart contract functions declared in the documentation during its testing;
  • making edits to the code designed to prevent the possibility of making changes to the results of the program;
  • the use of the “minimum and sufficient” rule in relation to the logic of the smart contract code;
  • a thorough study of the code sections responsible for handling situations when one of the parties to the contract does not fulfill its conditions;
  • implementation of measures aimed at monitoring the implementation of SC.

But the most responsible approach should be taken when implementing measures aimed at neutralizing threats from those parts of the code that are responsible for implementing the consensus function, since they are fundamental, that is, they have the lifetime of the entire smart contract operation:

  • evaluation of the stability of the algorithm implementing consensus for the reaction to possible external threats and actions aimed at violating the conditions of consensus;
  • the use of hybrid schemes for the implementation of the consensus mechanism, which will reduce the vulnerability of the original algorithms;
  • using the maximum possible number of nodes of a distributed network (performed at the smart contract deployment stage);
  • logging of emerging incidents;
  • organization of traffic analysis measures;
  • minimizing the size of the transaction record entered into the block.

As you can see, some of these recommendations apply to the general rules of “good” programming, but most of them are related to the specifics of distributed decentralized networks.

Does your SC need an audit?

The measures described above do not guarantee that your smart contract code contains no errors, or that it will be protected from hacking attempts. And since it is almost impossible to return lost funds in the world of cryptocurrencies, and changing the logic of SC requires a hard fork, it is better to minimize the likelihood of such events in advance.

For these purposes, smart contracts get audited, which allows for the identification of problems in the code and logic of the program. The main condition is that the audit is carried out by external specialists, and it should be highly qualified personnel.

The Decimal project team is glad to offer its services both in the audit of smart contracts and in their development. We are professionals in this field with a large portfolio of completed projects optimizing business processes in order to derive additional profit.

Cody Rhodes
Cody Rhodes
Cody Rhodes a learning specialist, designs and delivers learning initiatives (both in-class and online) for a global and internal audience. He is responsible for the ongoing development, delivery, and maintenance of training. He has the ability to manage competing priorities to execute time-sensitive deliverables within a changing environment. He contributes to continually improving the team's processes and standards and works as a member of the team to assist with team initiatives.


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