Bitcoin and other altcoins have been continuously rising. There are days when the market corrects, but the dip is not that significant compared to the previous years. The crypto industry seems to be doing fine independently without the need for government or bank intervention. Since it uses a decentralized system — the Blockchain — crypto is off-limits for the central bank.
However, this doesn’t mean that the Blockchain should not be dealt with when it’s on the verge of destroying a user’s safety and security. There are Blockchain risks and the only way to prevent them is to do a technical audit.
What is a technical audit in the crypto industry?
The Blockchain has so-called protocols that allow the storage of transaction records to preserve the integrity of such data. These Blockchain protocols build the foundation so that applications that run through the Blockchain can ensure that data sharing can be performed without the need for a central repository to make the exact copy of the information. The protocols also determine the standards on how to transfer data and establish data structures.
Basically, the subject of the technical audit is these Blockchain protocols. Technical audit in Blockchain means doing an assessment of the transactions recorded within the decentralized system. It is the process performed to verify the completeness and correctness of the transactions based on the available supporting documents in a Blockchain ledger. It’s pretty much like a technical/financial audit performed by an auditor. The only difference is that instead of auditing financial ledgers, Blockchain ledgers are involved.
How does technical audit in Blockchain work?
The technical audit in Blockchain starts by introducing the framework modules the auditors will use in the process. There are a couple of frameworks involved in the audit and it depends on what risk areas are being tackled.
For example, risk areas such as accidental loss of cryptographic keys causing the inability to take asset ownership and unencrypted storage and use of private keys are dealt with under the key ownership and management framework. The audit areas here include key decommissioning and generation, logging and auditing of usage of the private keys, and version control.
The risks involved play a huge role in technical audits. The more risk areas there are, the longer the technical audit is. Each auditor also uses different metrics to evaluate Blockchain protocols. A more comprehensive audit is better for the improvement and maintenance of the Blockchain.
Why is technical audit in Blockchain useful?
A lot can happen within the Blockchain. While it makes everything easy and automatic, challenges and risks are attached to how the system works. Cryptographic technology secures data in the Blockchain through private keys. Without these private keys, users can’t claim asset ownership and their data will be lost forever if the keys are not recovered.
A technical audit helps the prevention of future problems and identification of risks. It’s a process that helps developers or users to find the main dilemma and eventually formulate the solution for it. The strength of Blockchain protocols is only as good as the code. With a technical audit, the protocols can be strengthened.
Who does the audit and what are the limits?
Auditors do the technical audit in the Blockchain. Big auditing companies such as PwC, Deloitte, and KPMG already have auditing solutions that address the Blockchain. There are also other audit service providers who focus on auditing Blockchain protocols and cryptocurrencies exclusively.
In terms of limits, technical audit in the cryptocurrency is only within the Blockchain. Other things outside of it are tackled separately and in a different manner. Every transaction involved within this decentralized system may be accessed if necessary.
Given that the Blockchain is a complex system compared to others, it’s essential to choose someone who audits Blockchain exclusively, such as Certik. Professionals in Blockchain technical audits can give the best recommendations to improve protocols and solve major issues if any. Right now, TacoSwaps in undergoing technical audit by Certik to ensure the quality of its protocols before going live.
