Page 43 - FIGI: Security Aspects of Distributed Ledger Technologies

Mitigation and Recommendations: may come with sacrifices and introduce risks and
vulnerabilities. This may manifest as the ‘tragedy
• Wait for Multiple Confirmation: It has become of the commons’ problem, where those with larg-
the standard for most merchants and providers to er stakes can profit at the expense of those with
wait to receive multiple confirmations before con- few. Similarly, legal and operational actions may
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sidering a transaction complete when using POW be difficult where formalities are lacking, such as
consensus mechanisms such as Bitcoin, most being able to hire or protecting the legal rights of
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often being at least 6 confirmations. Merchants the product which can include user safety and pre-
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have been recommended to disable direct incom- vention of fraud. A spin-off issue from this issue
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ing connections and select specific outgoing con- is the ability for the DLT developers to change /
nections; consider using a listening period to switch the governance model after the main-net
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spot a double spend transaction which has prop- launch as occurred with EOS. 309
agated along the network; have a peer group of
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observers and encourage rapid and efficient com- Risks:
munication across the network of double spends
and bad actors; engage in a cooperative mea- • Voting contract bugs could allow someone to
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sure between peers which checks both the block- delete votes from the voting contract and freeze
chain and their own memory pool of transactions new participants out of the contract. 310
to scan for attempts at double spending. • Decentralization of standardized, traditional pro-
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• The use of the Lightning Network and payment/ cesses can lead to unintended results (The DAO)
state channels can remove some of the traditional as well as the reduction of efficiency/effective-
problems with double-spend attacks. ness of traditional centralized hierarchical man-
• Monitoring of Activity: Mining pools and hash agement;
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power is constantly monitored, such as by Chi- • Forking, because significant disagreement can
nese cyber-security firm SlowMist among others, result in severe consequences such as ‘forking,’
and several mining pools have already voluntarily where influential members become direct com-
refused to approach reaching near 50% hash pow- petitors;
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er. Other industry monitors include Chainlink. • Voting irregularities can occur (bribes/ ‘game-the-
• Change Consensus Algorithm: The cost to mount oretic attacks’); 313
a 51% attacks against smaller crypto-currency, • Governance can effectively approach centraliza-
such as renting equipment, is estimated as low as tion as a result of influential stakeholders, founders
under USD 1,000 per hour against crypto-curren- and key developers -- transactional governance
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cy such as Bitcoin Gold, Bytecoin, Verge-Scrypt, can be influenced by the presence of just a few,
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Metaverse and Monacoin. There have been such as large mining operations and consortiums
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plans by some crypto-currency, such as Ethere- of miners can take control of the network with as
um, to move to Proof of Stake theoretically makes few as 3-4 Bitcoin or Ethereum mining operations
a 51% attack much less appealing and possible. which have dominated over 50-60% of the net-
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Group-IB recommends a different encryption work.
algorithm. Litecoin Cash has suggested a ‘hive’ • Low voter turnout - the process can be inefficient,
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of worker bees to thwart 51% attacks. 305 voter/stakeholder participation can be limited; 316
• Overall, a negative image of a DLT project can
8.7.2 Issue: Governance Voting Dominance and result from difficulty in understanding ultimate-
Irregularities ly who may own or control a project, which can
lead to difficulties with trust and direct investment
Dimensions Affected: Network, Data Model, such as fundraising and backing. 317
Execution, Application
Mitigation and Recommendations:
Vulnerabilities: To ensure the security of the blockchain and clean
governance, private DLTs could use fewer nodes.
• Attempts to decentralize governance in larg-
er pools of diverse stakeholders, such as public
blockchains which have asymmetries in incen-
tives can gain measures of independence but
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Security Aspects of Distributed Ledger Technologies 41