What Is A Smart Contract Audit?
Technological progress is now racing at all stages. A considerable number of new technologies appear every year, and most of them deserve your attention. A striking example is blockchain technology and smart contracts. With their help, you can provide ideal protection for your arrangements and use cryptocurrencies. Most large companies tend to create such software to order. Smart contract audits allow you to ensure that all processes are performed correctly and that the system will work without errors.
What is a smart contract?
Smart contract definition says that this is a particular type of agreement, where all processes take place automatically, and a computer checks the terms of the deal. So, programmers prescribe what conditions must be met for the transaction to take place. The system contains all the data and, if everything is taken into account, then transfers the money.
All processes in a smart contract are irreversible. It means that after the transaction is completed, it will be impossible to return the money. As a result, it is necessary to carefully consider all the conditions under which transactions can be made.
Smart contracts exist only based on blockchain technology. It is a unique database that works in a decentralized manner. It was initially designed to carry out transactions using cryptocurrencies, but now it can be used across different industries (for example, in medicine, logistics, tourism, sales, and many others).
The first smart contracts were created based on the Ethereum blockchain, but today other technologies can be used. Nevertheless, Ethereum remains the leader in creating smart contracts, if only because a unique programming language has been developed here. It allows you to make more robust protection and prescribe almost any conditions that must be met. Such software development is more difficult since the number of programmers who know this programming language is insignificant. As a result, now you can find a lot of smart contracts on a different basis.
Smart contracts are now widely used for financial transfers with cryptocurrencies and the purchase of tokens and in many other industries. For example, the pharmaceutical company Pfizer used smart contracts to sell vaccines around the world. Large world companies have already appreciated the advantages and disadvantages of this technology.
Benefits of smart contracts
Smart contracts have a lot of advantages:
- It automates a lot of processes;
- It has perfect safety;
- There is an ability to perform transactions using cryptocurrencies and tokens;
- It improves trust between partners.
In ordinary life, when two people agree on something, they draw up a contract, where all the rights and obligations of the parties are spelled out. If the transaction took place, but one of the subjects did not fulfill its obligations, then the other party can seek help from the court. Such litigation can last for years and cause significant damage to the reputation of both parties. A smart contract does not allow the other party to fail to fulfill its obligations. The system is built in such a way as to prevent the possibility of fraud.
Disadvantages of smart contracts
Even though smart contracts have many apparent benefits, many companies are moving away from using them. It is because they have several disadvantages:
- You cannot control the processes;
- All processes are irreversible;
- If a smart contract is poorly thought out, a company can suffer significant losses.
All processes in blockchain technology are decentralized. On the one hand, this is good since no one can influence the system's decisions. It is again an opportunity to avoid fraud. Nevertheless, if the smart contract is poorly spelled out, the system may make decisions incorrectly and illogically, leading to harmful consequences.
Smart contract audit will avoid all of the above problems. Independent experts can double-check your code, identify bugs, and advise on how best to resolve them.
How are smart contracts created?
A smart contract has a rather complex development process, which includes several stages.
Stage 1. At the first stage, the developers and the customer agree on creating a smart contract, what functions it should perform, and much more. First of all, it is necessary to determine how the client wants to use the smart contract. Also, this stage involves planning work.
Stage 2. Writing code. Usually, a ready-made blockchain engine is taken as a basis into which a new smart contract is embedded, taking into account the client's wishes. Subsequently, a blockchain-based application should be obtained.
Stage 3. Testing software and finding errors, eliminating them, checking vulnerabilities.
Stage 4. An independent smart contract audit company checks all systems, reviews the system performance.
Stage 5. Making corrections suggested by the audit company. Preparation of all necessary documentation (specification of the smart contract).
Stage 6. Delivery of the project.
Each of the above stages is of great importance because the entire system's performance depends on them. Usually, one person cannot cope with such a volume of work, so a whole team of professionals is working on the creation of one smart contract.
Why is it worth auditing smart contracts?
When writing program code, developers may not notice some errors. In addition, when doing self-testing, they may not pay attention to some points.
After smart contracts have been put into operation, fixing all the errors becomes challenging and often impossible. As a result, all mistakes and miscalculations must be corrected even before the system is fully operational.
The audit company is engaged in the fact that it performs all possible system tests, looks for vulnerabilities and reads every line of code in search of errors. If any shortcomings in a smart contract have been identified, experts recommend how to fix them quickly.
At the end of the audit, the company provides a full report on the work done. Here you can see what tests were carried out and what predictions were made for the system's operation.
A specialized company offers a fairly wide range of services. Here you can also get advice on various issues in the field of blockchain technologies.
The smart contract audit process
Smart contracts security audit involves several steps:
Step 1. Study of design documentation. Further testing will largely depend on the tasks set by the customer.
Step 2. Review of architecture and design. Checking the system from the point of view of an ordinary user; how convenient it will be for the customer to use the system.
Step 3. Testing. The program is given various tasks and problems that it may face in its work.
Step 4. Analysis of interactions with other smart contracts and programs. A smart contract on the network may meet with other complex software during operation, and it is crucial to understand how it will behave.
Step 5. Analysis of SWC registry problems. It is one of the most sophisticated registries for verifying smart contracts.
Step 6. Proofreading. Experts read the code on their own without using various tools.
Step 7. Analysis of the identified errors. All errors identified in the course of work are collected and analyzed, and recommendations for their elimination are given.
Step 8. Submission of all documentation to the developers.
Most of the above steps are carried out using a variety of software and tools. They can be purchased from other developers or audited by a company. It is very important to approach software verification consistently and systematically, then the likelihood of uncovering a non-obvious error becomes much greater.
Professionals know very well what to focus their attention on when identifying errors. It is the key to success. Experienced audit companies monitor the work of fraudsters and try to identify how they hack systems, what tools they use, and how they look for vulnerabilities. Simply put, an audit specialist uses the same techniques as attackers and checks how the system reacts to them. It lets you make sure that the smart contract is written correctly and that all data will be safe.
Separately, you need to check all the functionality of the application. It will make sure that the client will be comfortable using it, all functions work as needed, and there will be no problems.
The most common mistakes
There are several common mistakes that developers ignore. They are usually associated with:
- Number rounding errors;
- Incorrectly handled exceptions and call stack restrictions;
- Logical omissions;
- Centralization of power issues;
- Insecure outside calls and more.
It is pretty easy to identify such errors if you use innovative technologies and manually proofread the code. It will also not be difficult to correct such remarks.
Who should perform the audit?
An audit of smart contracts should be carried out by a qualified specialist who is well aware of the system's operation, understands the program code, and knows how to identify the principal vulnerabilities. Simply put, these are usually independent specialists who have previously been involved in developing such software and know what points to pay attention to first.
Usually, the smart contract audit is a rather complicated process that takes a lot of time because many tests have to be carried out. To speed up this process, a whole large team of auditors takes on the job.
Smart contract audit cost is usually calculated considering the number of hours specialists spend on checking all systems. Usually, the price of the services provided is negotiated before starting cooperation. Most companies do not consider the number of errors found in the formation of the cost of services.
So, if you want the audit to be as fruitful and efficient as possible, you need to seek help from an independent company with extensive experience and good recommendations. The audit results can be published in the future, which will significantly improve the trust between you and your partners. Your customers will be sure that the system is working correctly and no problems will arise.
The smart contract is one of the most widespread blockchain technologies today. It allows you to create ideal protection for your agreements and ensure they are executed flawlessly. A smart contract audit will enable you to ensure that the system is working correctly at the stage of software development. It is the key to trust between you and your partners and confidence that everything is under control.