Page 44 - FIGI: Security Aspects of Distributed Ledger Technologies

8�8 Key Management 8.8.2 Issue: Credentials Hijack

8.8.1 Issue: Loss or Compromise of Private Keys Dimension Affected: Data Model

Specific Threats: Users Cannot Access Wallets Specific Threats:
Values or IDs Collision and Pre-Image; Flawed Key Generation;
Vulnerable Signature; Lack of Address Creation
Dimensions Affected: Data Model, Execution, Control
Application, External
Wallets and exchanges are the most popular targets Vulnerabilities:
for hacks and attacks since there is the potential for Credentials Hijack; Use of login credentials: The
reaching large volumes of digital money, in a central- mechanism of generating keys has potential weak-
ized location and many have tried to use standard nesses as there is not any centralized validation to
security solutions which don’t fit well within a cryp- ensure that keys have not been used prior. Instead,
to-currency context. 318 since there are an extremely large number of unique
addresses which can be generated and while the
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Vulnerabilities: Loss of user credentials chance of duplication (or collision) is supposedly
Human error in transcribing or transmission of the infinitesimally small, the chance still exists whereby
long string of characters which comprise addresses the user with a duplicate key can access the other
and private and public keys can result in a perma- key owner’s tokens. An unlimited number of keys
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nent loss of an address or public key. Digital or hard can be generated by anyone, potentially creating
wallets are also at risk as digital storage can fail, data multiple addresses owned by the same person (in an
can become corrupt over time, hardware can be lost, attempt to maintain privacy.) There is also a ques-
destroyed and stolen and passwords or access meth- tion of whether key collisions will occur and, as an
ods for encrypted information forgotten or lost. increasing number of addresses will be used, wheth-
er the current method of unlikely duplication is a
Risks: Loss of funds, values and IDs prudent approach. Box 5 shows the use of an offline
solution for DLT for login.
Mitigation and Recommendations:
Risks:
• The use of hardware wallets provides addition- Theft of funds; Access to critical layers in DLTs
al convenience and security for those who wish
to have funds more readily accessible. Use of Mitigation and Recommendations:
multi-signature wallets are recommended, which
requires multiple signatures to operate, similar to • There are network and mining pool monitors which
require multiple passwords or authorizations. The regularly patrol the public blockchain for signs of
main advantage of this approach is that the inves- unusual or potentially malevolent activity, includ-
tor remains the sole owner of its private keys at all ing but not limited to Chainlink get sources of the
times, which reduces the risk of a hack, as there blockchain auditors. Mining pools and hash power
is no central point of failure. Yet, not all investors is constantly monitored, such as by Chinese cyber-
may have the necessary expertise and equipment security firm SlowMist among others, and several
to safe keep their private key properly. Also, this mining pools have already voluntarily refused to
model may be ill-suited to certain types of inves- approach reaching near 50% hash power.
tors, e.g., institutional investors, where several • It has become the standard for most merchants
individuals and not just one need to have control and providers to wait to receive multiple confir-
of crypto-assets. mations before considering a transaction com-
• Figure 8 shows the use by Kiva of multi- plete when using POW consensus mechanisms
party attestation of identity for a user who cannot such as Bitcoin, most often being at least 6 con-
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access their ID credentials. firmations. Merchants have been recommended
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to disable direct incoming connections and select
specific outgoing connections; consider using a
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listening period to spot a double spend transac-
tion which has propagated along the network;
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42 Security Aspects of Distributed Ledger Technologies