Can Criminals Take Advantage of Blockchain Smart Contracts?

Bitcoin has typically been associated with criminal activity, as the anonymous nature of transactions allowed illegal dealings to be practically untraceable without any money trail. While the underlying blockchain technology has gained a better reputation for possibly transforming several industries, its smart contracts might be vulnerable to criminal use as well.

This has been explored by an article on the MIT Technology Review website, tackling the issue of how criminals could also tap into this blockchain technology. Blockchain refers to the public ledger of bitcoin transactions, which is verified and updated by a network of computers solving complex algorithms to add a block to the code.

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Blockchain and Criminals

Blockchain has drawn the attention of several financial institutions and large companies for its potential applications on record-keeping and smart contracts. Instead of relying on records that are stored on servers that can be easily hacked, the use of a distributed ledger could make the storage more secure and verification more efficient.

In particular, online retail giant Overstock has explored the use of blockchain in financial settlement by creating a cryptosecurity based on the distributed ledger. For CEO Patrick Byrne, this could eliminate the need for middlemen and high transactions costs incurred in settling trades.

However, Ari Juels, a cryptographer and professor at Cornell Tech, suggested that this might also be useful for criminal activity. “In some ways this is the perfect vehicle for criminal acts, because it’s meant to create trust in situations where otherwise it’s difficult to achieve,” he said.

Juels worked with fellow Cornell professor Elaine Shi and University of Maryland researcher Ahmed Kosba to research on potential ways in which blockchain smart contracts can be corrupted in criminal use. Some examples include contracts that offer rewards for hacking a particular site in which funds would be released when a cryptographical proof is provided.

Source

TheBitcoinNews.com – leading Bitcoin News source since 2012