Blockchain technology has become a buzzing topic for discussion in business. The technology can serve as the basis not only for mining cryptocurrencies but also for smart contracts. It is known that smart contracts on the blockchain have all chances to replace traditional documents.
There are three main characteristics that define smart contracts like immutability, transparency, and the ability to hold value. Nevertheless, these characteristics also may turn smart contracts into a security risk. In this article, we will discuss the most common issues to avoid when implementing smart contracts.
Issue #1: Block gas limit vulnerabilities
The block gas limit is Ethereum’s way of ensuring blocks don’t grow too large. It simply means that blocks are limited in the amount of gas the transactions contained in them can consume. Put simply, if a transaction consumes too much gas it will never fit in a block and, therefore, will never be executed.
This can lead to a vulnerability that comes across quite frequently: If data is stored in variable-sized arrays and then accessed via loops over these arrays, the transaction may simply run out of gas and be reverted. This happens when the number of elements in the array grows large, so usually in production, rather than in testing. The fact that test data is often smaller makes this issue so dangerous since contracts with this issue usually pass unit tests and seem to work well with a small number of users. However, they fail just when a project gains momentum and the amount of data increases. It is not uncommon to end up with unretrievable funds if the loops are used to push out payments.
Issue #2: Forgetting about monetary units
Since smart contracts exist on the basis of the blockchain, accordingly, all calculations can only be carried out using cryptocurrencies. And where to get cryptocurrency for someone who is not involved in mining? After all, there are quite a few exchanges that allow you to exchange cryptocurrency for fiat money and vice versa. Although with the legalization of cryptocurrencies by different countries and the opening of new exchanges, this obstacle will be removed.
Issue #3: Hoping for smart contract adjustments
When concluding traditional contracts, situations often arise when something needs to be corrected, clarified, changed. In this case, "appendices" are written to the contract. But in blockchain technology there is no "administrator" who could make corrections to the contract, there is no center that can stop a running program. Programmers know this, but people who give them terms of reference can forget.
The attitude of users and specialists to the fork is still ambiguous. Some consider it to be a mistake that undermines confidence in the system. One thing is clear: in more "ordinary" cases, if an error is found in a smart contract, it will be impossible to rewrite it! The only option is to write a "correcting" smart contract, which, of course, presupposes the goodwill of the participants in the transaction.
Issue #4: Forgetting about laws
In the off-line world, any contract can potentially be challenged in court. The agreement, which was declared invalid, loses its force and the parties return to their original position.
However, the invalidation of a smart contract will not affect its "legal effect" and will not allow it to be canceled in any way, and system participants will still see information about the transaction.
Although today there was not a single high-profile case when the laws of any country came into conflict with the written computer algorithms. But, perhaps, this will happen as cryptocurrencies are legalized in different countries worldwide. This is something to keep in mind for entrepreneurs who plans to work with smart contracts.
Issue #5: Trusting privacy
The use of cryptocurrencies assumes the complete confidentiality of payment parties. But the details of transactions, on the contrary, are available and open. For example, you can find a parsing of a smart contract that provides an online roulette game and the calculation of winnings. Enthusiasts who checked the code concluded that the casino plays fair and does not cheat players. But such openness is not always good for business.
Issue #6: Simple Logic Bugs
The most common type of issue consists of simple mistakes in the logic of the smart contract. Such bugs may the result of a misunderstanding of the specification, a simple typo, or a larger programming mistake. They tend to have severe implications on the security and functionality of the smart contract.
What they all have in common though, is the fact that they can only be detected if the entrepreneur understands how smart contracts work while the auditor understands the code base completely and has an insight into the project’s intended functionality and the contract’s specification. It is these types of issues that are the reason smart contract audits take time, are not cheap, and require highly experienced auditors.
Things have changed over the last couple of years in smart contract programming. Countless high-profile cases resulting in lost money have made projects aware of the need to take things seriously. We do find that developers are more aware of common vulnerabilities and frequently employ tools, such as static code analysis and symbolic execution to automatically scan their code.
If you still have some questions or you are looking for a reliable tech partner to implement the smart contract into your business, drop us a line and we assist you in any inquiries!