Why Security Audits Are Essential For Every Smart Contract

According to some, smart contracts are the future of business. They claim that while using them, no one has to worry about not being paid, or paying for something that is not delivered. That’s because smart contracts are self-executing computer programs, unlike traditional paper contracts which require people to take action. However, like other programs, they are at risk from coding errors and hackers. This article explores how security audits offer an additional line of defence against these threats.

Protection Against Financial Losses

In traditional banking, transactions that go to the wrong account can usually be reversed. The bank will be able to trace the recipient’s information, such as their name and address, from their account details. On the blockchain, things are not so simple. While all transactions are recorded on a ledger, account holders can remain anonymous, rendering lost funds irretrievable.

This makes it incredibly important to ensure that all the details within a smart contract are correct, which can be tricky to do when they are buried in lines of code. A smart contract security audit allows a fresh pair of expert eyes to double-check every detail and makes sure the contract does exactly what the parties are expecting it to do.

Building Trust for Your Brand

In a marketplace where people can remain anonymous or may not be who they say they are, it can be hard to know who to trust. Well-designed self-executing smart contracts protect you under these circumstances, but they do more than just make sure each individual transaction goes smoothly. Getting them audited and publishing the report shows that you are serious about safety and security, making it more likely you will be approached by like-minded and trustworthy counterparties.

Demonstrating these traits and generating trust in your online brand can also help you access more funding for your projects or get larger orders from your customers.

Preventing Exploitation of Vulnerabilities

The blockchain today is used for everything from trading digital images to handling sports contracts for athletes. However, no matter what it is being used for, there will always be persistent bad actors out there looking to exploit vulnerabilities for their own gain. Security audits help make sure that your smart contract is not at risk of attack, and if it is, they will typically recommend some fixes and retest the code after they have been implemented.

Improving Code Quality and Efficiency

Depending on the talents of the developer, smart contracts may contain redundant lines of code that do not pose any kind of security threat, but just make everything less efficient. On the blockchain, this can actually end up costing you money, as some platforms, such as Ethereum, charge “gas fees.” These are basically transaction fees, and they can increase when more network capacity is needed to process a transaction. Efficient code helps minimise the capacity needed.

Enabling Compatibility Across Platforms

Smart contracts vary greatly in complexity. At the simple end of the spectrum, they can instantly send a payment once an agreed product or service has been delivered. However, some contracts contain long chains of instructions that perform actions across many different platforms, some of which may not even be on the blockchain. Every platform involved is another potential place where things can go wrong or where hackers can strike.

A security audit checks that a smart contract is compatible with all of the platforms it needs to use and makes sure that security is maintained across them.

Conclusion

Smart contracts may eventually be able to revolutionise contracting, as their proponents suggest. Security audits are certainly helping them to do it by making it safer, easier, and quicker for anybody to do business on the blockchain.