The Haves and the Have Nots of Cryptocurrency Platform Audits

Blockchain is a purely online digital technology. It relies heavily on efficient coding to function without major errors and security risks.

That may, however, not be the case. Security issues and breaches have plagued many blockchains, resulting in massive financial losses. 2021 alone saw hacks result in heists worth a cumulative $4.25bn. It represented a tripling of the 2020 figure of $1.49bn, still a hefty sum.

Granted that a good portion of the loss wasn’t attributed to blockchain protocol compromises, prevention of vulnerabilities in the same is important. And that’s where crypto audits come to play. Read on to learn more.

What are Crypto Audits

As professional crypto protocol auditors perform, a crypto audit is a comprehensive review of the blockchain’s or smart contract’s protocol. The keyword point to note is as performed by professionals. Non-professional audits may not have a comprehensive enough review due to inadequate tools or expertise.

It involves employing automatic bug detection tools to expose common vulnerabilities present in its code. It also involves a structured and systematic manual execution of the protocol’s code review.

Details on the Crypto Audit Process

A blockchain protocol audit is quite a complex process that requires several parameters to be established. The parameters include the audit’s aim, the basic requirements before the audit and how it is done.

Aim of the Audit

There is one primary aim behind every smart contract or blockchain protocol. It detects high severity bugs on the code that increase its vulnerability to exploitative attacks by hackers.

The aim doesn’t change whether the audit was by reputable professional firms such as Solidproof or by individual coders reviewing a protocol. The effectiveness of fulfilling the aim defers due to different levels of expertise and access to audit tools.

Requirements for a Crypto Audit

The first requirement before an audit is done is establishing a deep understanding of the blockchain’s architecture. The crypto audit team must understand the project’s use cases and properly understand its system’s key components. It involves close cooperation with the project’s development team.

Secondly, the auditors must have the code diagnostic tools. The primary tool is the automated bug detector, whose primary role is, as its name goes, to detect bugs automatically. It can also gauge the severity of any bugs detected.

Lastly and most importantly, there is the need to have a team of expert crypto protocol auditors. They play the primary role of manually executing a well-structured and systematic review of the blockchain. They give a second professional opinion on the severity of bugs detected by the automated sector. 

Phases of a Crypto Audit

There are two phases. The first and key phase is threat modelling. It is important in revealing data spoofing and the tempering of data. It is crucial to identify denial-of-service attacks, where perpetrators make the system’s resources unavailable to its intended users. Such attacks are most common when clone programs are created, successfully posing as the project to swindle users.

The last one is the test or exploitation phase. It involves the attempt at exploiting all the vulnerabilities that are detected during the first phase. It makes it possible for the auditors to gauge the project’s estimated level of susceptibility to threats identified with a high level of accuracy. It also enables the team to draft countermeasures that can aid reduce vulnerabilities as identified.

Duration of the Audit

The time taken to audit a blockchain is dependent on two key factors. The fact is the size of the project, with larger projects taking significantly more time. The second is the project’s level of complexity, with very complex ones requiring more time to review the huge number of variables.

Given these factors, the time taken to audit a blockchain protocol varies greatly. Auditing a small and fairly simple project may need just one day, while huge and complex ones could run for several months.

Understanding the Differences Between Professional and Non-Professional Audits

While both have the same aim, professional audits and non-professional audits have several differences.

  • Auditors Constituents

The most obvious difference is the auditing party; behind a Professional audit is always an audit firm specializing in providing clients’ audit services. Notable names include Solidproof, Hacken and PWC Switzerland.

Non-professional audits are usually carried out by individuals with coding knowledge in open-sourced coding projects. 

  • Call to Action

The project’s administrative and development team initiates the professional smart contract audits. They will normally contact the firm, usually influenced by an attack or security breach.

Non-professional audits may be initiated by many factors but are always not as requested by the project development team. Any coder may choose to debug the project’s open-source code for vulnerability, irrespective of whether there is a breach or not. The project’s development team may not even be aware of its protocols’ audit.

  • Cost of the Audit

Since firms contracted by the project developers usually carry out professional audits, they come with a high cost. It usually runs into thousands of US dollars.

Non-professional ones, in turn, always come at no cost at all.

  • Repercussions and Validity of Audits

A professional blockchain protocol audit always results in the minimization of risks to attacks for the specified project. Its results are comprehensive, resulting in a better understanding of a project’s architecture and use cases. Its results are usually valid, requiring no further audits in the near future.

A non-professional audit, on the other hand, can have huge to no repercussions. The repercussions may also be positive or negative. When done by some independent coder on the protocol in a comprehensive way, they may find no vulnerabilities resulting in no repercussions. If a potential bug is found, it may be reported, and the developers will run a professional audit to better gauge vulnerabilities or solve the problem immediately. If the auditor was a hacker, they might exploit any vulnerabilities found by attacking the project.

Take Away

All crypto projects need to carry out a crypto audit. It helps assure the authenticity of the project’s well-being as well as reduce susceptibility to losses.  Investors are rational and will therefore not commit their investments in an insecure project.

The options for auditing include professional and non-professional ones. Most projects now understand the importance of contracting a professional blockchain protocol audit thanks to the authenticity of its results and access to audit tools and expertise. They have, in turn, been increasingly contracting crypto audit firms to run their audits.

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