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than relying solely on the nodes who offer the guar- online 24/7 exposes their IP addresses and potential-
antee of ledger integrity. ly also their online custody of staked assets.
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DLT-based solutions also intrinsically rely upon
multiple users (and nodes) for achieving critical Mitigation & Recommendations:
mass: Nodes need more nodes to distribute the data, At least for critical infrastructure, resilience of nodes
to do the validation of the blocks in the process of for a particular DLT required to prevent 51% attacks
being added, and to do the processing itself. Wide- should be ensured. DLTs thus combines elements
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spread adoption then is essential for the positive net- of the need for high availability (HA) and disaster
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work effect of DLTs to be truly harnessed as a single recovery (DR). Disaster recovery addresses multiple
entity using blockchain could be seen as analogous failures in a datacenter while HA typically accounts
to a centralized database, The more trusted parties for a single predictable failure. HA infrastructure
per node that are needed, so too does the com- component or IT system must thus be “fault toler-
promisable ‘surface area' of a distributed network ant” or having the ability to “fail over.” DR is related
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increase. to the resources and activities needed to re-establish
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IT services at an alternate site following a disruption
Risks: of IT services. This includes components such as
Increased Reliance on Nodes May Increase Vulner- infrastructure, telecommunications, people, systems,
abilities applications and data.
The nascent DLT ecosystem also offers a rich attack
source for directly stealing value – as tokens - from 8�5 General Concern: Safety of Funds and Informa-
‘wallets’, often stored in exchanges that use basic tion
security unrelated to the more robust DLT that
spawned the tokens. DLTs in the current state of 8.5.1 Issue: Inability to distinguish between un/
development are also resource-intensive with back- authorized users
end running the DLT needing to be secure end-to-end, Dimensions Affected: Network, Consensus, External
including uptime requirements for validation nodes Nodes on the blockchain are – using current protocols
required to implement consensus mechanisms in the – said to be unable to distinguish between a transac-
chosen DLT design. This creates challenges, espe- tion by an authorized, actual user and a fake transac-
cially in developing countries where communications tion by someone who somehow has gained access
networks may always not be robust or fast enough to to the blockchain trusted party’s private key. This
allow nodes to be available for these purposes. The means that if a bad actor gains access to a compre-
less nodes, the more a DLT could be subject to a ‘51%’ hensive banking blockchain that itself accesses all or
attack. Similarly, POS and the need for ‘stakers’ to be of part of a core banking network blockchain - or a

Box 1:
Network Resiliency - Sikka Nepal’s Digital Asset Wallet Using SMS

Developmental Program ‘Sikka’: Sikka means “coin” in Nepali, which points at its use of an Ethereum
token contract to manage the creation, distribution, and validation of all transactions within human-
itarian aid programming. The system was devised by the Nepal Innovation Lab to allow users to
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send and receive tokens by interacting with the Ethereum main network via SMS, where the user’s
wallet is associated to their mobile number. Sikka though is not electronic money, nor a crypto-cur-
rency though: it is a limited-use ‘digital asset’ token on an ERC-20 contract deployed to the Ethereum
main network for the purpose of tokenizing and then tracking assets of value within humanitarian aid
programs. It’ thus a digital asset transfer network
Security Aspects: Because the tokens can be created to represent access rights to a variety of aid
goods, including cash-based transfers and it can be deployed to distribute goods, including cash, to
places where financial services are limited, and telecommunications networks are less than reliable.
Beneficiaries thus do not need or use dApps: only SMS on basic phones is used to access value. 233

34 Security Aspects of Distributed Ledger Technologies