Blockchain technology has built a reputation for having an immutable, strong security that many experts suggest is impossible to hack. While the technology is nearly impossible to hack, its adjacent processes, such as transactions, can be manipulated and assets stolen.
Blockchain hacking has recently seen a significant increase, with hackers taking advantage of vulnerabilities and stealing nearly $2 billion of cryptocurrency since 2017. In 2022, cryptocurrency businesses lost $3.8 billion to crypto hacking, making it the biggest year of hacking.
Smart contracts are often the targets of attacks because of the large amounts of money transacted through them. It’s, therefore, essential to hire smart contract auditors. So, what is a smart contract audit, and why is it important that you conduct it? Keep reading to learn more.
Understanding smart Contracts and their audits
Smart contracts are digital programs stored on a blockchain that automatically run when predetermined conditions are met. These digital contracts are used to execute transactions between two anonymous parties without needing an intermediary, central authority, or legal system.
On the other hand, a security audit is an examination of the code that supports the digital contract. The inspections are done to identify bugs, security vulnerabilities, and technical issues before executing the smart contract. The audit is done by professionals who recommend solutions upon detecting a security loophole.
Should the bugs and loopholes in your system not get detected early and fixed, your transaction may be compromised by a malicious party. This may not only cause financial loss, but it can also ruin a project that you may have taken so long to build. Therefore, conducting a smart contract security audit is currently a very crucial step for every developer. The process offers some robust benefits, including:
- Audits enhance security and privacy.
- They lead to increased trust in the contract code.
- Conducting audits helps avoid costly errors.
- They allow interoperability with other contracts.
- Conducting smart contract security audits increases efficiency.
- It also increases the accuracy.
- The audits are a learning opportunity for continuous improvement.
Enhance Security and Privacy
The key advantage of these audits is they offer safety and reliability. First, auditors can detect issues and any errors in the contract that can lead to malicious attacks and other security compromises.
By identifying any loose ends beforehand, smart contract auditors can prevent any associated risks, potential attacks, and other security incidents that can cause financial losses and reputational harm from happening.
Increased Trust
Knowing that your project is safe from potential threats and susceptibility increases trust. Furthermore, security audits promote transparency, allowing users to track and verify their transactions and data in the blockchain. This level of transparency also goes a long way in increasing trust in the contract code. The more trustable your system is, the more likely people will transact using your smart contracts, translating to more business.
Lastly, a secure contract positively impacts the project’s reputation since users are more likely to trust a safe system to protect their interests.
Avoid Costly Errors
Any potential error in the contract code can lead to a significant loss of money. In 2021, approximately $775.7 million was stolen in just one month alone -October- in 32 different attacks. Smart contract security can help avoid these losses by mitigating potential risks early.
Secondly, smart contract security auditors can help protect user funds by curbing unauthorized access to funds and token theft. This protects user assets and investments.
It Allows Interoperability
Interoperability is when different systems or software can communicate and connect with each other. This means your contract codes can exchange data and communicate with others efficiently and securely.
Interoperability enables the execution of more complex transactions, which are more profitable to the company. Auditors review these interactions by verifying that your contract handles data from external sources and validates these interactions correctly.
Increased Efficiency
Uncovering potential threats or errors in the smart contract can also help to make sure the execution is quicker and more accurately. Additionally, efficiency uses fewer resources, thus reducing costs and increasing profits. Also, increased efficiency can lead to customer satisfaction since tasks are quicker and more accurate.
They Help Improve Accuracy
First, auditors thoroughly examine any bugs or coding errors that can interfere with the accuracy of the contract. Their evaluation focuses on aligning the code with its relevant functionality.
Secondly, auditors scrutinize smart business logic to adhere to requirements and rules. Verifying business logic ensures the contract is accurate. In addition, this also promotes data integrity. User inputs, external data feeds, and transaction details are some data usually handled in smart contracts. Auditors usually evaluate how a contract runs and validates data, ensuring its integrity. Data integrity is one way to promote accuracy and reliability.
They Are A Learning Opportunity For Continuous Improvement
Audit processes are always an opportunity for all parties, particularly business owners and developers, to understand what they’re dealing with, the risks and threats, and find ways to counter them. It’s only with a good understanding of what they’re dealing with that they apply this knowledge and develop better solutions for future projects.
Conversely, hackers are constantly developing new ways of enhancing their malicious activities. Therefore, developers also need to keep up with the ever-changing trends. Regular audits can help to identify and address this threat landscape.
Hiring Smart Contract Security Audit Services
Before seeking the services of a smart contract auditor, it would help to investigate if their track record is positive or negative; you can do this by looking for similar projects they have done before —for example, research for testimonials, reviews, and references from their previous clients.
- Methodology and Approach
How does your auditor conduct their audits? It is essential to know if their methodology aligns with the requirements of your contract. Find out what steps they follow, which tools they utilize, and how they do their analysis. Ensure you pick an auditor who will do a complete and in-depth job.
- Compliance
Your auditor should be compliant with relevant security rules, codes of conduct, standards, and regulations. This shows that they can offer quality, professional, and thorough audits.
- Transparency
You want to ensure that your auditor can transparently communicate with you and respond effectively to your concerns. Additionally, find out if they can provide a comprehensive and detailed report of their findings and strategies.
- Cost and Turnaround Time
Look out for competitive prices, but ensure you don’t compromise on quality. Discussing the estimated cost that aligns with your budget would be best. In addition, ensure that the company or auditor you choose can work around the clock and beat audit deadlines.
Final Thoughts
In conclusion, smart contract security audits offer a range of essential benefits for successful implementation and execution. By identifying anomalies and susceptible areas, enhancing security, protecting user funds, safeguarding reputation, allowing Interoperability, and improving trust, efficiency, and accuracy, audits mitigate risks and instill confidence in the reliability of smart contracts.
Many people are now moving to smart contracts as an option for sealing deals, and the importance of doing security audits can’t be overstated. Everyone in this realm must prioritize security to harness this transformative technology’s potential fully.
