4 months ago- News -
Blockchain; An Increasingly Popular Tool for Fundraising, Amidst Increasing Security Concerns
Blockchain is a revolution with rapidly growing industry surrounding it. Even in these foundational years, we can see blockchain creating a safer and more secure financial world for generations to come. In this new era, there will need to be a lot of adjustments implemented to strengthen blockchain’s growing foundation.
Initial Coin Offerings (ICOs) are enabling people with innovative ideas get sufficient investments to make their ideas come to life. ICOs are increasing drastically ever year, the first ICO was held by Mastercoin in 2013. By 2017, ICOs gained major popularity, with around 400 that year alone. The frequency of these offerings are becoming more rampant, by August this year there have been around 700 already. The frequency of the offerings has been proportional to the amount of investment, reaching nearly $18 billion this year already.
The ever increasing frequency of ICOs is a positive trend for blockchain as a whole, but has come hand-in-hand with increasing risks related to technical security. A key issue ICO companies are facing is the safety and security of their smart contracts. Unfortunately, not all ICOs have professional or experienced teams of developers creating their smart contracts. Sometimes these contracts aren’t even audited by a third party, the result is an open target for hackers. High-profile smart contract hackings appear to be a regular occurrence, raising serious concerns about the security of important, but lower-profile, smart contracts.
The necessary precaution is for ICOs to have their smart contracts audited by a company that specializes in identifying and exploiting flaws in code before it’s too late and the product is deployed. However many ICOs don’t recognize the importance of the safety of smart contracts, even though, these contracts are directly linked to the security of investors and customers funds. Companies have even tried to find ways to pay less with bounty-like-programs, making their smart contracts public and incentivising the auditing of them with tokens. And even when companies do spend significant funds on the security of their contract, regardless of various audits, things often go wrong. Investors are often not aware of the threat of cyber-attack and do not encourage ICO teams to perform sufficient auditing.
Within these foundational years, a learning curve of the security of ICOs is to be expected. There are several auditing companies improving and refining the safety of ICOs funds, learning different ways to make smart contracts more secure. In October this year, HoshoCon will take place, the first blockchain security conference of its kind, hosted by the auditing company Hosho. The conference held in Las Vegas will be three days and over 100 security experts presenting futures issues surrounding blockchain security while discussing how to solve existing problems. ICOs and venture capitalists will be in attendance of the annual event to enhance their security levels.
Blockchain was intended to make the financial world a safer place for people, but in this foundational period, it’s not expected to be perfect. Improvements in security will be made day by day depending on companies will to learn and improve.