Research about blockchain technology, type of attacks and solutions
RESEARCH ABOUT BLOCKCHAIN TECHNOLOGY, TYPE OF
ATTACKS AND SOLUTIONS
SVTH: Lương Quỳnh Hương, Cao Thu Huyền, Lê Đức Anh
GVHD: ThS Đỗ Thị Phương Thảo
Abstract - In the 4.0 technology wave, Blockchain is considered by the technology world to be
the most noteworthy advancement after the birth of Internet. With the ability to share data information
transparently, saving storage space and high security. So, Blockchain is a wide application in many
fields and trades. Especially, Bloc chain’s most well-known applications are celebrated
cryptocurrencies ( Bitcoin, Ethereum, Swell, …) which are raging the advertise.
However, nothing is perfect, besides the advantages, blockchain also gets some problems. One
of them is an attack vulnerability called Double spending. Double-spending is an issue where the
same cryptocurrency can be utilized different times. Ensuring security for this issue is an extremely
urgent task. So anticipating Double-spending attacks for Blockchain framework is greatly essential
within the context of rapidly developing cryptocurrencies.
Therefore, the findings of this paper will find out about Blockchain and Bitcoin Cryptocurrency.
Along with that, we will mention to a weak point of Blockchain- Double spending and research on
security against attacks including Double spending hypothesis attacks and attack resistance in
practice help Blockchain apply for Bitcoin cryptocurrency.
Key – Blockchain, attacks, double spending
A: OVERVIEW ABOUT BLOCKCHAIN AND CRYPTOCURRENCY
1: Overview of Blockchain
1.1: Definition
As defined, Blockchains is a decentralized database that stores information in
information blocks linked together by coding and extending by time. Each information block
contains information about the initialization time as well as linked to the previous block,
along with a time code and transaction data.
―The blockchain is an incorruptible digital ledger of economic transactions that can be
programmed to record not just financial transactions but virtually everything of value.‖.
According to Don and alex Tapscott, authors of Blockchain Revolution (2016).
1.2: Blockchain structure
Merkle tree: In encrypt data, Hash tree
or Merkle tree is a model in which the treetop
of these model are Hash‘s value of a data
block, and the rest are the hash value of points
lower than it. Root of Merkle is hash value of
all its intermediate values.( Figure 1:
Merkle Model)
Chain link : A chain, or a list of chain in
picture (Figure 2: Merkle tree link together
by Hash code), created when an unit of
data store a Hash value of an data unit
before. Only need 1 change in the data
before, Hash value will be changed and the
chain will be broken.
A group of data include the trunk is Merkle tree that contain link to the exchange
happen at the same time and the top contain root of merkle tree with time function. In picture,
the other data blocks allow chronological order when created will contain with Hash link of
the group data before. All of the structure will create a thing that called blockchain.
1.3: Characteristics of blockchain:
Indestructible and indestructible
Immutability
Security
Transparency
Smart Contract
1.4: Applications of Blockchain
Blockchain is now revolutionizing most industries across the globe: Entertainment
Technology (KickCity, Guts…); Social Networking dating (Matchpool,…); Retail industry
(retail industry, warranteer,…); Driver (Bitcar,…); Health care (MedicalChain,…); Real
Estate (BitProperty, Deedcoin,…).
According to the statistics of Infinity Blockchain Lab, although currently in Vietnam
market, Blockchain technology, although not too strange, is still not widely available, mainly
applied to the following areas:
Financial services (> 83%)
Agriculture / Food / Commodity Supply Chain (nearly 40%)
Public services (approximately 30%)
1.5: Main versions of Blockchain:
Blockchain technology currently has 4 major versions:
Blockchain 1.0 - Currency and Payment
Blockchain 2.0 - Finance and Markets
Blockchain 3.0 - Design and Operation Monitoring
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Blockchain 4.0 - Real time platform
2. Overview of bitcoin cryptocurrency
2.1: Definition
Cryptocurrency, known as encrypted money, is designed to active like a means of
transaction. This money use code to secure and verify exchanges, also to control the way
creating new unit of one specific encrypted money
Bitcoin is the first electronic money use peer-to-peer technique have open source, the
first electronic money using blockchain. ―Bitcoin is really the first application of blockchain
technology that allows us to send a digital asset via the internet to another user on the Internet,
in addition to this secure transaction. Safe and confidential, everyone knows that this transfer
has taken place and no one can intervene and interfere or modify this process‖ according to
Marc Andreessen.
2.2: Popular cryptocurrency, bitcoin wallet, bitcoin mining
Common currency modes: Bitcoin (BTC, XBT); Ethereum (ETH); Ripple (XRP);
Litecoin(LTC); Zcash (ZEC)
Bitcoin wallet
Everyone use bitcoin create a selfwallet to send bitcoin and store it. Most of wallet store
bitcoin have high security through many class or function allow people to print paper wallet
for itself to store in safe place.
Coin mining
Mining bitcoin is a "miner" process of finding a solution to a difficult math. The
difficulty of this problem is automatically corrected so that on average every 10 minutes a
miner (or a group) scattered around the world solves a block and gets 12.5 BTC / block and 1
BTC is currently at $ 2400.
Virtual coin mining in general and bitcoin mining in particular are the form of
using computers with high VGA configuration, or other specialized hardware to run
mining software.
1)2.3. Advantages, disadvantages and applications of bitcoin cryptocurrency
a. Advanatges:
Convenience in transaction
b. Disadvantages of bitcoin
The number of users is not much
Bitcoin cannot be counterfeited
High security and very safe
Extremely low transaction costs
Extremely low transaction costs
Protect the environment
It's not easy to use bitcoins
Bitcoin prices often fluctuate
Bitcoin prices often fluctuate
The potential of developing e-
commerce
c. Applications
- Used for exchanging and trading other coins on the cryptocurrency trading floor
- Used to be an international remittance with super low cost
- Forms of payment in BTC help minimize costs, save time for businesses
- Use for short-term / medium-term investment / speculation, to earn additional income.
B: TYPE OF ATTACK TO BLOCKCHAIN SYSTEM
1: Risk when use blockchain technique
-Lack of privacy
Many blockchain doesn‘t have privacy. Account balance and trade can be seen by
everyone.
- Privacy challenges
Many secure processes in Blockchain makes it more difficult to agree on a common
problem and may be less secure than current methods because people will record a private key
so they don't forget it.
- Inexistence of centralize management
None of single organization can be managed changes or trends in Blockchain, this make
organizations that use it may have to deal with risks when trading since they can‘t control the
adjustment in the system.
- Risk of 51% Attack
Many computer operating Blockchain globally are located where is unreliable due to
criminal issue, law system and shortages of regulations. Low electricity costs and computer
costs in many countries have created many blocks mining center in Blockchain. If data
centrals linked together, they have ability to control more than 50% network and take control
the management network.
- Unqualified technology
Blockchain technologies are practically unqualified and mostly used in virtual money.
These limit companies or realistic system that apply blockchain technology to prove higher
productivity than the current system.
- Expenses
Require high amount of electricity to operate. For every half an hour that blockchain
consume equal to the electricity that households in America use in one year.
- Expanding challenges
The blockchain network hasn‘t been prove to have the efficiency compared to the
current system. Bitcoin network can only process about 7 trade per second while Visa can
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process upto 20.000 trades per sec.
- Lack of knowledge about Blockchain technology
Blockchain operating methodology and its benefit is complex to many people. They
also concern about blockchain perspective such as their balances and transactions are public.
Even when people understand those benefits, they still fond of current system.
- Policy and combination
Systems based on blockchain platform will have to deal with policy problems with the
high-time consumption and high cost in cooperating with current systems. Government and
banks stand against changes because of scale and the expense is too high to renovate current
system.
2. Basic types of attacks
- Attack Sybil
The Sybil attack aims to damage the P2P network by forming some fake identities.
Attackers can set up some fake buttons that seem real to their peers. These spoofed nodes are
involved in damaging the network to authenticate unauthorized transactions and to change
valid transactions. They may use some device, virtual machine or internet protocol (IP)
address as a fake node for the attack. The P2P network assumes that each participating node
consists of only one identity. Consequently, some pseudo-nodes provide an attacker the
ability to reject transmission blocks and to bypass honest nodes. When an opponent owns a
large number of network nodes, it will double the opportunity to spend double. However,
having a large number of nodes in the bitcoin blockchain network leads to a very expensive
attack.
- Eclipse attack
A fruitful Overshadow Assault empowers a would-be awful performing artist to
disconnect and hence avoid their target from achieving a genuine picture of genuine organize
movement and the current record state.
This assault is made conceivable since a decentralized organize does not let all hubs at
the same time interface to all other hubs on the arrange. Instep, for proficiency, a hub
interfaces to a select bunch of other hubs, who in turn are associated to a select bunch of their
possess. For case, a Bitcoin hub has eight outgoing associations; Ethereum 13.
Other potential eclipse Attack effects on a PoW network such as Bitcoin, as noted in the
2015 paper by Heilman, Kendler, Zohar and Goldberg, include:
Engineering piece races: Two miners find a block simultaneously
Splitting mining power: In an effort to make it easier to launch 51% attacks a malicious
actor could eliminate eclipsed miners from the network and in doing so reduce the amount of
active miners
N-confirmation double spend: Most merchants wait until a number (N) of blocks have
been confirmed before releasing their goods to prevent against double spend attacks.
However, if enough miners have been eclipsed thenan attacker can launch a double spend
attack against an eclipsed merchant in spite of this. An attacker would be able to present their
transaction to eclipsed miners, who add it to their ledger. This state is then shown to the
merchant who cannot know better, given they too have been eclipsed and removed from the
wider network. Once the merchant has sent the reciprocal goods to the attacker then the
eclipsed miners‘ ledger is discarded and the merchant is left empty handed
- 51% attacks
In blockchainbitcoin technique, Since the process of mining (in PoW-based systems)
involves the investment of huge amounts of electricity and computational resources, a miner‘s
performance is based on the amount of computational power he has, and this is usually
referred to as hash power or hash rate. There are many mining nodes in various locations and
they compete to be the next to find a valid block hash and be rewarded with newly generated
Bitcoins.
In such a context, the mining power is distributed over different nodes across the world,
which means the hash rate is not in the hands of a single entity.
But what happens when the hash rate is no longer distributed well enough? What
happens if, for example, one single entity or organization is able to obtain more than 50% of
the hashing power? One possible consequence of that is what we call a 51% attack, also
known as majority attack.
Simply, a 51% attack occurs when malicious actors pick up control of more than 50%
of a blockchain network‘s hash rate, hence the name. Since the hackers have at least 51% of
the network‘s hash rate, they can force the rest of the network to erase their transactions.
- Finney attack
The Finney assault may be a variety of a double-spend assault. The aggressor makes
two exchanges - one crediting the victim and one crediting themselves. They keep the primary
exchange for presently and continue to undertake mining the moment one into a block. When
they succeed (this may take a while), they quickly make a buy with the primary exchange, get
the products they acquired, and after that discharge the pre-mined piece. This way the primary
exchange will gotten to be nullified, indeed in case it is engendered through the entire
network.
This variation of double-spend assault is harder to execute (mining a piece by oneself
hasn't been simple for a long whereas), but is imperceptible until it has been completely
executed. The as it were way to secure oneself against such an assault is to require at slightest
one affirmation for exchange some time recently giving out obtained products, and requiring
more affirmations for exchanges worth more.
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- Timewarp attack
Timestamp faking was the key vulnerability used by the attackers in this hack. Since
Verge is a decentralized network, there‘s no central authority to set the official time for
everyone. As a result, enforcing perfect time synchronization within the network is also quite
challenging, and consecutive blocks may have timestamps that are out of order
(MihailSotnichek, 2018). It mean that Disturbing block timestamps to reduce network
difficulty (recently used against cryptocurrency Verge)
3. Double spending attack
2) 3.1. Definition
- Double spending is a problem in which a kind of virtual money can be used many
times. In the other words, Double spending is a case that a transaction uses the same input as
another transaction which is broadcasted on the Network. This a only serious hole of digital
currencies as digital information can be copied easily. Some virtual currencies such as Bitcoin
can be considered as a digital file (Bisade Aslo,2018).
Looking at the example below
A goes to Vinmart and buys something, total orders is $20. A pays by cash and receives
bill. As soon as cashier puts $20 in the register, A consumed $20, A can only use that $20
again only if A steals it.
Physical currencies do not have the same Double spending problem that is faced by
digital currencies. Because each participants in the transaction of a physical currency already
get right to visual access to the original physical currency.
3) 3.2 Operation principle
The hypothesis of Double spending is that a hacker gets control of more than half of the
mining system in the Blockchain.
a. Task
Supposed that Linh owns 100 Bitcoin and use it to buy a laptop. After delivering 100
Bitcoin into laptop company‘s wallet. Linh will receive the laptop a few days later.
By carrying out a Double spending attack on Bitcoin‘sBlockchain, the transaction can
be reversed. In case of successful attack, Linh can own the laptop and 100 Bitcoin still
remains in the Linh‘s wallet. From that, Linh goes on using 100 Bitcoin at another
transaction.
When Linh carries out transaction, 100 Bitcoin will be transfer into laptop company‘s
wallet. This transaction is encrypted and put into a place called ―unconfirmed transactions‖.
The miner selects these unconfirmed transactions and forms a block. Then the block is added
to the network blockchain grid.
However, to do that, the miners need to solve a very complicated issue. Numerous
miners will fight with each other, whoever tackles the issue first will be united his square on
the blockchain.
b. Mechanism of action
Before going into the working principle of the 51% attack, let's say once more about
Blockchain. A blockchain governs a data ledger, for example transaction data. Blockchain
replaces 3rd parties to do this, such as government or banking. This is what makes (most)
decentralized blockchains. The Bitcoin blockchain protocol is based on democracy, which
means that the majority of participants (miners) on the network will decide which version of
the blockchain represents the truth.
Figure 3: Creating a fake, undeclared Blockchain (The orange blockchain can be considered
in ‗stealth‘ mode.)
A miner be able to not public his block and create a branch blockchain which is not
declared as Figure 3. In figure 4, when I complete a transaction of buying a laptop with 100
Bitcoin, I declare and confirm that transaction on green blockchain. The transaction will be
confirmed by other miners and my wallet will be deducted 100 Bitcoin.
Figure 4: Making transactions both on the fake and real Blockchain
On the orange blockchain, I can not make this transaction and 100 Bitcoin be still in my
wallet. This blockchain is not declared, so it is not possible for other miners to know
Blockchain operates under a democratic governance model, also known as a majority.
Blockchain also confirms the longest blockchains. Normally, the real blockchain version with
the participation of many miners around the world will have the fastest speed of adding new
blocks. This is the way to blockchain determine which version is real. If I have enough power
to run faster than the real blockchain, I can turn my fake blockchain into real blockchain
(Whoever has the most hashing power will add blocks to their version of the chain faster-
Figure 5)
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Figure 5: The corrupt miner is now adding blocks to his private chain faster because he
has more hashing power.
Therefore, after creating the longer blockchain, I broadcast my orange blockchain to all
other miners.
The rest of the network includes other miners, will discover that my fake blockchain is
longer than the version which they are working on. These miners have to move through the
new blockchain.
Figure 6: Creating the longer chains and broadcasting them to the miners
I fooled all other miners, turning my fake blockchain in to real blockchain. In figure 7,
at block 40 of the fake blockchain, I cannot make a Bitcoin transfer. So, I still have a laptop
and I still have 100 Bitcoin in my wallet. Obviously, the wallet of company selling laptop will
not have 100 Bitcoin of mine.
Figure 7: Occupy control and become the main chain
A flaw in the bitcoin system that can lead Double Spending is the 51% attack, because
of getting a faster confirmation speed then the entire blockchain network, individually, I have
to gain the computing power by 51% of total power of excavators in the world which joins to
this network
C: Double spending resistance solution
1: State and probability of performing Double Spending and 51%
An attacker is trying to create an alternative string faster than honest chain. Even these
happened, it also does not open the system for arbitrary changes, such as create value out of
stream or take money never belongs to an attacker. Nodes will not accept an invalid
transaction as payment and honest nodes will never accept a block contain them. An attacker
just can try to change one of the transactions of them to bring back the money that he pay
recently.
After the researchers solved the problem on this issue, the probability of the attacker
catching up is 0.0002428 (~ 0.03%). In the real Bitcoin network, it is very difficult for an
attacker to spend double the amount they paid earlier. Although experts admit that it is
theoretically possible, most people think that 51% attacks will be so difficult to execute that
they have not posed a legitimate threat.
However, everything has changed. Last year, a number of successful 51% attacks,
including a few on reputable blockchains, proved that the threat was real. 51% attacks are no
longer an abstract concern. Every single blockchain project must put security before all else.
51% Attacks success in 2018 & 2019
There were a number of successful 51% attacks in 2018 and the trend is continuing in
2019. Here is a list of the attacks that have occurred
- April 4, 2018: Verge (XVG) 51% attacked for a loss of ~$1.1 Million.
- May 14, 2018: Monacoin (MONA) 51% attacked for a loss of ~$90,000.
- May 22, 2018: Verge (XVG) 51% attacked again for a loss of ~$1.75 Million.
- May 29, 2018: Bitcoin Gold (BTG) 51% attacked for a loss of ~$18 Million.
- June 2, 2018: ZenCash (ZEN) 51% attacked for a loss of ~$550,000.
- June 4, 2018: Litecoin Cash (LCC) 51% attacked for unknown losses.
- September 8, 2018: FLO Blockchain (FLO) 51% attacked for a loss of ~$27,500.
- November 8, 2018: Aurum Coin (AU) 51% attacked for a loss of ~$500,000.
- December 2, 2018: Vertcoin (VTC) 51% attacked for a loss of ~$100,000.
- January 7, 2019: Ethereum Classic 51% attacked for a loss of ~$1.1 Million
It's important to note that these are only the 51% attacks that were revealed publicly. It's
quite likely that many more attacks occured away from the public eye and were never
publicized
All of consequences make a 51% attack a catastrophic event for any blockchain project.
2. Solution to minimize attacks from Double spending
In reality, the attacks are troublesome to execute. Like it said recently, a miner will
require more hashing control than the rest of the combined network to realize this. Consider
the truth that maybe even hundreds thousands of miners on the Bitcoin Blockchain, one
malicious miner will need to spend huge sums of money on mining equipment to fight with
the rest of network. Even the strongest computers in the world cannot compete directly with
the total power of calculation in this network
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Avoiding double spending can frequently be taken care of in two ways: collective
centralized or decentralized.
- With collective centralized, a central third party and trustworthy will usually be
responsible for verifying that a digital currency has not been double spent.
- The decentralized nature of Bitcoin means interrelated issues related to the focus
method mentioned above, such as a ventricular point defeat only and must believe that a third
party is blocking the correct amounts doublespending, no longer exists. Bitcoin use a
consensus mechanism is called proof of work to avoid the need of a focused party. Instead of
requesting a trustworthy central party to validate the transactions are not double spending, a
group of decentralized individuals called miners perform this task. All of the transactions
Bitcoin also included in storage system called Blockchain, this guaranteed that it is able to
prove that any party wants to spend Bitcoin really owns that bit. A transaction is invalid when
a block is added to the chain and will be stored in blockchain. When many others block is
added to Blockchain, the return and double spending will be more difficult
Besides, there are 5 most advanced defense techniques to reduce 51% of attacks that
are: A Penalty system for delayed block submission, Delayed proof of Work (dPoW),
PirlGuard, Chainlocks, Merged Mining.
Summary - Through time of research, research and implementation, we have
introduced everyone to the general content of blockchain, cryptocurrencies and Bitcoin,
outlined the basic types of attacks on the blockchain system. overview of Double Spending
attacks and technical solutions to minimize Double Spending attacks today. This is a unique
flaw for cryptocurrencies because digital information is something that can be copied quite
easily. Ensuring safety for this is an extremely urgent task to ensure the transparency of
Blockchian and ensure the value of digital currencies. So preventing Double Spending attacks
for Blockchain systems is a prerequisite for cryptocurrency to be put into practical and safe
applications.
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