Security Audit Meaning
What is a Blockchain Security Audit?
On a blockchain network, a security audit is an analysis of a blockchain to identify and mitigate any security risks. The audit utilizes advanced codes to scan and identify loopholes in the blockchain’s software, smart contract, and codes and fix any vulnerabilities that they have.
Companies use blockchain security audits to assess their operations, records, and transactions, and ensure that the network is up-to-date and accurate. Security audits are also a routine measure to ensure that the systems are resistant to hacks, leaks, and other cyberattacks. In decentralized finance, smart contracts can hold, receive, and send funds. So a single vulnerability in the code can lead to massive losses. Smart contracts are also often integrated with other applications that are unaffiliated with an organization. For this reason, when auditing a smart contract, an organization also has to audit these third-party applications integrated with its system.
Besides these reasons, security audits help ensure that the company, such as an exchange, is compliant with regulatory requirements, especially as it regards the handling of user data. Auditors may visit and examine a company’s facilities and data infrastructure. The auditors may also assess the safety nets in place to prevent a breach.
How are Security Audits Executed?
Security audits can be executed using automated or manual technology. In automated security audits, specialized auditing software is deployed on the blockchain to analyze the code of a smart contract and detect potential bugs and vulnerabilities. These tools scrutinize every line of code to identify and fix any vulnerabilities. Automated security audits are cheaper, faster, and simplify the auditing process. That said, most companies prefer manual auditing since it is more thorough and involves experts.
Professionals use auditing tools to audit the blockchain in five steps.
- Set the goal of the audit and decide which areas to focus on during the auditing process.
- Note the vital components of the blockchain’s current infrastructure so that the team can familiarize themselves with the platform. Auditors will also compare the audited version with the one they met at the end of the process.
- Identify potential threats, bugs, and weaknesses in the blockchain infrastructure. Auditors do this by scanning the nodes and application programming interfaces (API) of the blockchain. This scan is vital, because nodes and APIs conduct the bulk of transactions that happen on a blockchain.
- Auditors then carry out a threat modeling operation, which is essential in discovering spoofing and data tampering vulnerabilities.
- Threat resolution is the last part of the operation. It involves fixing all the detected vulnerabilities in the blockchain.