How Secure are Smart Contracts?

What Is A Smart Contract?

A smart contract is digitally coded terms to be executed between two or more parties without a third party. It was first offered by Ethereum blockchain. Usually, smart contracts are used for cryptocurrency transactions, for ICO token sale, and other cryptocurrency related transactions but smart contracts now are being used for another business purpose as well. For example, to execute operations related to financial services, to manage digital identity, for copyrighted content, and many others. In a smart contract, the terms are decided by parties involved.

Moreover, there can be more than two participants for a single smart contract development as well but it was seen in past that a contract involving more than two failed or security of participants information, wealth and identity was at stake.

Security of Smart Contract Development

One of the most critical threats in a smart contract apart from bugs is that the digital key can be stolen. As we know, there are two keys to enter a particular blockchain. One, a public key to join the decentralized network and other, private key to secure your identity as well to transact. If the private key of an individual is stolen, the whole of the blockchain’s participants data can be at stake.

Another threat to the stored information is the network itself. Like the BitCoin based blockchain, Ethereum is an open-source network as well. Anyone who joins the network can access the data of a smart contract even if there are different layers of contracts by other participants. The blockchain is vulnerable to threats like these which makes the smart contracts useless for organizational purposes.

New Smart Contracts: Chaincodes

As the blockchain technology is upgrading with different names, one of the names which are likely to stay is hyperledger projects. Hyperledger project is a collection of the different system offering unique features of blockchain collectively and independently both. Out of those projects, hyperledger fabric provides private blockchain for enterprise uses and is also known as enterprise blockchain. Unlike BitCoin based blockchain and Ethereum, the hyperledger fabric is a permission network where involved parties are known to each other as required for in an organization and permission from the network operator or need to follow network guidelines to enter the system.

Hyperledger provides the same mechanism of smart contracts known here as “chaincodes.” The chain codes are executable like smart contracts without a third party, and the layers of chaincodes make sure information stored on hyperledger fabric stay immutable and known only to participants of chain codes (smart contracts). Moreover, due to features of hyperledger fabric, chain codes eliminates the threat to information going around to public as only known participants are allowed to enter the network.

Another project known as Hedera Hahsgraph development provides the same mechanism as hyperledger projects including smart contracts. The only difference is that the Hedera Hashgraph is a semi-centralized network where a particular industry leader anonymous to one another controls the blockchain network.

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