Everything You Need to Know About White Hat Hackers and How They Make Blockchains More Secure

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Hackers are most often seen as bad guys. And for good reasons too. According to Security Magazine, there is a hacker attack every 39 seconds, with hundreds of thousands of innocent users falling victim to cyber crimes every year. However, cybersecurity is getting stronger every day, and while it may sound absurd, some of this progress can actually be attributed to the work of hackers.

But they are ethical hackers, also known as white hat hackers, who use their hacking skills to identify flaws in hardware, software, or network security. These hackers operate within legal boundaries and do not go to the wrong side of the law.

Let’s see how some of these hackers are making the decentralized finance (DeFi) space more secure.

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Recently, hacking veteran Jay Freeman was in the limelight for discovering a billion dollar vulnerability in three of Ethereum’s Layer 2 networks. The bugs were found in Ethereum’s Optimism, Boba, and Metis networks, which he later dubbed “Unbridled Optimism.” According to Coindesk, Optimism, Boba, and Metis had approximately $750 million locked up in DeFi on the day this issue was revealed, and almost all of it would have been at risk at the time. The gravity of the situation speaks for itself.

During the first week of February 2022, Freeman discovered an issue with the “self-destruct” feature of Ethereum smart contracts. This feature is designed to weed out expired or obsolete smart contracts and transfer the associated Ether (ETH) balance from the network’s native currency to a different address. This can be exploited to suck billions of dollars of liquidity from the system and leave DeFi service providers at a loss.

A few weeks ago, crypto exchange Coinbase was saved from an embarrassing disaster when hacker “Tree of Alpha” connected with CEO Brian Armstrong to inform him of an impending threat. It has been pointed out that Coinbase order books could be transferred to other addresses at arbitrary rates, allowing criminals to earn millions of dollars in the process. This was a critical briefing, and within two hours of being made aware, the exchange patched the vulnerability and restored trading services for all users – a worthy example of how hackers can really help.

White hat hackers seek to expose all possible flaws in a project’s underlying code. They may arrive at their discovery through research into open source software (free for all), systems and software they own themselves, or through investigative rights granted to them by “programs”. bug bounties” run by developers. These programs distribute rewards to hackers who can get through and report security flaws that need to be fixed. Last year, the US government, for example, offered rewards of up to $10 million in crypto assets to induce hackers to take out state-sponsored actors or other potential threats on the dark. web. Companies also employ these ethical hackers to test their information systems.

There are also white hat hackers who do ethical hacking for fun. In August last year, a white hat hacker embezzled $612 million from the Poly Network and later returned it after much negotiation, claiming the heist was “for fun”. Although the term “white hat hacker” is not exactly applicable in this case, a significant vulnerability was exposed in the process.

What tools do white hat hackers use to secure blockchains?

The tools used by white hat hackers are the same as those used by black hats (cybercriminals), but the intent of use is to help organizations improve the security of their networks. They perform a stress test with in-depth network scans for malware, identifying the potential threat of hacking into a platform’s information systems, and even prompting employees of the organization/company platform to click on links leading to malware infestations.

These are two common ways they help improve systems:

  • Pen Tests: Short for penetration testing, ethical hackers use their knowledge to identify potential entry points into systems, then breach them to determine the extent of damage they can cause.
  • Denial of Service (DoS) attack: This is one of the most popular forms of attack in the crypto world. These attacks render the service unavailable to users due to network disruptions and outages caused by performance-affecting hacks. Organizations must have a DoS response plan, which can be reinforced with the help of hackers.
  • With the increase in cyber crimes as cryptocurrencies become more popular, the need to identify underlying issues and secure systems has increased. And it is a daunting task without the help of hackers. They act as the faceless guardians of major cryptonets, silently protecting users behind the curtains.

    (Edited by : Priyanka Deshpande)

    First post: STI

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