Blockchain challenges: bugs, hacks, scaling, 51 percent attack

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challenges

The blockchain also faces challenges. There is always a 51 percent chance of an attack, even if it is unlikely. There have also been bugs and scaling issues in the past.

The challenges of the blockchain

One of the biggest challenges to the technology is its scalability, which is the ability of the system to adapt to its size.

Bugs and Hacks

A blockchain is a complex architecture that creates its own ecosystem. The computer code determines the rules of this world. However, computer code is written by humans and is therefore prone to errors. A flaw in the architecture of a blockchain can have far-reaching consequences for all participants.

In October 2018, a bug in the Bitcoin Core Client was discovered that theoretically allowed inflation. So it was a critical bug in the computer code that had gone unnoticed for months. Fortunately, upon discovery, Bitcoin Core developers were able to close the gap before it was exploited.

Another example of flawed computer code is the so-called  DAO hack . In 2016, the DAO (decentralized autonomous organization) was “hacked” by an unknown person. The attacker exploited a vulnerability in the code to steal around 150 million US dollars from the pockets of the DAO. In response, the Ethereum network performed a  hard fork  that undid the attack.  

Scaling

In addition to the practical implementation problems, the blockchain poses other challenges: the scaling of the technology to an infrastructure.  

scaling

Scaling is the ability of a system to adjust its size. Since the rules of the blockchain are written in computer code, it is difficult if not impossible to change them. With Bitcoin, so-called second-layer solutions (see also: Bitcoin Lightning Network ) are used here, among other things, to avoid scaling problems.

When there was a big rush for bitcoin around 2017, the blockchain was struggling to scale. Transactions were stuck, it just took too long for bitcoin to change hands.

The capacity of the Bitcoin blockchain is therefore very limited. This is not enough for a world economy. The so-called Lightning Network could help here. The Lightning Network allows transactions to be processed outside of the blockchain, while retaining the desirable properties that the blockchain brings with it.  

Another approach to solve the same problem is to increase the maximum size of each block.

Attacks   

Blockchains enable the digital, final transfer of values. This is tempting for attackers. If you could crack the system, you could tap enormous sums of money. In other words, blockchains are an attractive target for attackers.

For this reason, blockchains must defend themselves against attacks. Even the inventor of Bitcoin, Satoshi Nakamoto, thought about this problem. Through its proof-of-work mining mechanism, it was able to build a solid defense against many attacks.

With this mechanism, most attacks are implausible or very risky. In most cases, the attacker would be better off not attacking the Bitcoin network, but counting himself among the honest participants instead.

Because in Bitcoin, the economic incentives are designed in such a way that an attack is always associated with costs. The most well-known attack vector is the  51% attack. The attacker would have to have at least half the  hash rate  in the network to be successful.  

Such an attack is usually not profitable. Therefore they are considered unlikely. However, they are not impossible.

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