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Understanding Blockchain cybersecurity: What's Penetration testing?

Penetration testing

Penetration Testing

In today’s advanced technology, hackers are getting into the system and causing a large amount of damage. With hackers being everywhere security has become very important for all digital businesses. This has become a major issue for all the blockchain businesses where they are dealing with a large amount of money.

Penetration testing

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How much money are we talking about here? Blockchain and Crypto startups have raised an eye-watering $46.2 billion to date. Out of which 65% or as much as $30.1 billion was raised through token offering models such as ICOs, IEO, and STOs. Meaning these tokens are bought, sold and stored online, which is susceptible to cyber attacks. 


The companies have to take all the required steps in order to protect their company as well as the interest of the investor. The penetration test comes into the picture when investigating the codes thoroughly and taking all the required steps to test. A penetration test is known as the best method to find any potential security breach. To know more about what is penetration test read on.

What is Penetration Testing?

Penetration testing is a method of testing any computer device, network or any applications to check for vulnerabilities. Penetration testing is used to fortify firewalls when it comes to web application security. Now let’s look at why we need penetration testing:

· It is anticipated that by 2019, a cyber-attack will happen every 14 seconds in 2019 with complete losses adding up to $21.5 billion.

· The normal expense of these breaches for US organizations has come to nearly $7.5 million and it is nearly $5 million in the Middle East.

· The medicinal and financial enterprises have endured the most with losses at $380 and $245 per capita separately.

· In 2017, a cyber-attack was recorded at regular intervals of every 40 seconds which brought about complete losses of $5 billion, a staggering increment from 2015’s $325 million.

· Over 69% of the companies in the United States don’t feel that their anti-virus protection or firewalls can adequately shield them from attacks.

Penetration Testing: Stages of Penetration Tests

There are five stages of penetration tests, as per Incapsula and they are as follows:

· Planning and Reconnaissance

· Scanning

· Gaining Access

· Maintaining Access

· Analysis and WAF configuration

Planning and Reconnaissance

The act of gaining data, information or intelligence on your preferred target is to be known as reconnaissance. This has been made the first step because it makes sense to know about your target first and to decide which is the best course of action. There are two types of reconnaissance:

· Active reconnaissance: In this type, the target is directly interacted asked questions that help one learn more about the target and in deciding the best course of action.

· Passive reconnaissance: They contact and interact with their intermediary in order to get their reconnaissance information.

At this step, the scope and goals are defined by the tester for the tests in which they are going to mention the system that they are going to address and the testing type that is going to use.


In this phase, the technical tools are used to gather data and intelligence on the target. This phase is going to help the tester in understanding how the target is going to respond to different ways of cyber-attacks. There are two ways the tests are done in this phase:

· Static: This test is done in a single pass and inspects the code of the application to interpret how it is going to behave during the runtime.

· Dynamic: In this method, the analysis is very practical as you inspect the code of the supplication while it is running. It provides a real-time understanding of how the application performs.

Gaining access

In the phase, you extract data from the target or use devices to launch attacks on other targets by gaining access and by taking control of one or more network devices. This phase uses different methods wherein it un-cover the target’s vulnerabilities. The testers can exploit vulnerabilities like cross-site scripting and backdoors by escalating privileges, robbing the data, intercepting traffic, etc.

Maintaining Access

This is the secretive part of the test where the tester takes the required steps needed to maintain access to the network. In this phase the tester checks for the vulnerability that can be exploited to stay inside the Dapp system for a long time. In simple words, it means that if a hacker gets in by taking advantage of the vulnerability, how long can the hacker stay in without getting detected.


The analysis is the final stage where the tester needs to cover their tracks in order to remove all the detection chances. Simply it means that any chances that the tester has done must be reverted to its original form or state of non-recognition by the host network’s administration. Finally, all the test results are compiled into a report which consists of the following:

· All the vulnerabilities that were exploited

· Each and every sensitive data that was accessed

· The time duration that the tester was able to stay inside the system without being detected.

Thus, in the end, the report is studied in order to check out for all the vulnerabilities in the system.

Penetration Testing: Penetration Testing Methods

There are various testing methods such as:

· Internal Testing: An analyzer accesses the application behind its firewall and simulates an attack that a hacker would do. This attacker could be a malicious representative or it could likewise be a phishing attack.

· External Testing: Targeting the assets of the organization that is on the web. The case of this is simply the company’s website, the web application, the email, and the domain name servers.

· Targeted Testing: In this situation, both the tester and the organization cooperate to keep each other up to date about their developments. All things considered, it gives the organization constant criticism from a potential hacker’s perspective.

· Blind testing: In this test, the tester is just given the name of the venture that is being targeted on. Doing this will help security personnel to take an ongoing investigation of how a real attack will occur.

· Double-Blind testing: In this situation, the application will have no earlier information with respect to when the attack by the tester is going to occur. This recreates true conditions wherein an attacker won’t let the organization know about their attack beforehand.

Penetration Testing: Different types of Penetration Testing

There are various tests and checks that need to be done by penetration testers. Some of the common tests the pen testers do for blockchain-based companies are:

1. Keys and Wallets

In blockchain projects, the most important part is the wallets that are used through private keys and passwords. To. Make sure that the wallets are secure the testers need to execute the following two tests:

· Password strength: The strength of the password is very important to the hacker as he needs this with the private key to hack the user’s wallet. If the password is weak then it can be hacked pretty easily.

· Key Storage: there are ways methods that a private key can be stored like hot and cold wallets. The storage of these keys in a safe place is very important in the cryptography industry. Generally, people prefer cold wallets like hardware wallets to store their keys. Even though they are not free from hackers, penetration tests will make sure that the private keys are stored in a secured manner.

2. Redundancy Testing

The redundancy testing shows all the issues with the redundancy around data sharing across all the nodes. These tests show the impact of multiple nodes failing at the same time and what this failing will do to the system.

3. Synchronization Testing

It is very important for the blockchain network to be able to synchronize between themselves as they consist of peer-to-peep nodes. To make sure that the process is very fast and efficient it is important that there is synchronization between the nodes.

4. Consensus Algorithm Testing

One of the most significant things that must be tried is the consensus algorithm as it is presumably the most crucial piece of the blockchain. The consensus algorithm must be verified whether it is vulnerable to the 51% attack or not. In a system like Bitcoin which uses Proof of Work, it is extremely costly to launch the 51% attack. Be that as it may, that isn’t the situation with a few of the new coins.

5. Timejacking Attack

At whatever point a node joins a network, they have to monitor AND it should be in sync with its other peer nodes. The manner in which it does that is by keeping an internal clock system which happens to be similar to the computed median clock time of every one of its peers. On the off chance that this median time differs by an immense amount from its system time, at that point the inside clock corrects and returns to the system time. In this way, if a malicious node enters the system with an inaccurate timestamp, they will be able to modify the network time counter. This could prompt issues like double spending and mining resource wastage.

6. DDoS Attack

DDoS or Distributed Denial of Service attack is perhaps the deadliest attacks out there. It incorporates sending an enormous number of similar requests to clog up the system and deny the system from leading any type of activity. Tests should be done to ensure that the applications are free from potential DDoS attacks.

7. Blockchain API Testing

As API lets users interact with the blockchain is very important. Pen tests are done to ensure that the API endpoints are free from all vulnerabilities.

Penetration Testing: Penetration Testing vs Vulnerability Testing

· What penetration testing does is that it finds the vulnerabilities and use it to take advantage of the system whereas a Vulnerability assessment is nothing but the. process of finding the vulnerability in the system.

· The penetration test helps in finding the way through which hackers are going to take over the system. Vulnerabilities will be the end result which is prioritized by its potential.

· A penetration test is recommended for the companies that have good security and they need to search for hidden vulnerabilities. Whereas, vulnerabilities are recommended for companies where they have no security system or they have a known security issue and want to get started in that area.

· Penetration test emphasizes depth over breadth as they identify vulnerabilities with a particular goal in mind and want to know how the hackers will take over the system. Whereas, vulnerability emphasizes breadth over depth as it is more concerned about finding the vulnerabilities rather than understanding the true severity of each.

Penetration Testing: Test Cost

The average cost of a penetration test is expected to vary from $4000 — $100,000. The reason why it costs so much is that first of all you hire a specialist or a team of them to run your project. Then these tests should be done regularly. So that all possible run-throughs are made. These repeated tests increase the price of the test. You also receive recommendations for the identified vulnerabilities.

Instead of going for specialists you can do the penetration test through software which costs from $1000- $2000 which is much cheaper.

Penetration Testing: Advantages

· Identifies the large vulnerabilities that could be uncovered due to a mix of a few low-risk vulnerabilities

· Helps us figure out what sort of attack vectors could affect the application

· Identifies the true effect of successful attacks on the business and general tasks

· Helps us find the point of vulnerabilities

· It additionally it uncovers how great the security of the framework truly is

· On the other hand, in the event that the framework is easily broken into, at that point, it shows the organization that they have to put invest in better security systems

· Due to the report picked up post penetration testing, the organization can make all the important changes in accordance with improving their tasks and business.

Penetration Testing: Penetration Testing and Web application firewalls

Penetration testing and web application firewalls are mutually beneficial security measures. For many sorts of pen testing (except for blind and double-blind tests), the tester is probably going to utilize WAF information, for example, logs, to find and endeavor an application’s weak spots. In return, WAF heads can profit by pen testing information. After a test is finished, WAF configurations can be updated to secure against the weak spots found in the test.

At long last, pen testing fulfills a portion of the compliance requirements for security auditing methods, including PCI DSS and SOC 2. Certain standards, like PCI-DSS 6.6, can be satisfied uniquely using a certified WAF. Doing as such, be that as it may, doesn’t make pen testing any less valuable because of its previously mentioned advantages and ability to improve WAF arrangements.

Thus, this is a penetration test which will help in identifying and check for vulnerability in the system. By using different methods of pen testing we can gain insight into various types of attacks that are threatening and protect our system from them.


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