You wouldn’t want to put money in a wallet that could be compromised since the consequence would be losing your fund. The distributed ledger technology or blockchain has become the backbone of many financial assets.
Consequently, millions of transactions that are worth trillions of dollars are made on blockchains. More so, the technology is increasingly being adopted in several industries that handle sensitive data. This necessitates the audit of smart contracts and other blockchain projects to ensure that the data people trust and use for transactions are reliable and safe.
This is the essence of smart contract: to make sure that the integrity of the smart contract is maintained and that the data are secure and tamper-proof. This takes cognizance of the fact that such contracts have been programmed to execute based on predetermined variables without the need for third-party interference.
The Smart Contract Audit
A smart contract audit is an extensive scrutiny of the codes of a smart contract with the objective to discover possible flaws, bugs or vulnerabilities that could affect the integrity of the smart contract.
This takes cognizance of how the smart contract interacts with users, cryptocurrencies or tokens and even other smart contracts. The audit strives to identify any flaws that could result in poor execution of the contract or even losses to the parties involved.
Smart contract audits are essential because of the need to protect the integrity of the blockchain housing the contract and the codes of the contract, while ensuring that the parties using it do not incur losses. Also, the essence of an audit on a smart contract is to prevent the possibility of exploits from hackers and other malicious actors leading to losses to the parties using the smart contract.
How Audits Are Conducted On Smart Contracts
Since the smart contract interacts with other components and the parties involved, it is essential that the check on its codes be methodical and comprehensive. This could be manually done and analyzed or done through extensive tests.
Some smart contract platforms go to the extent of staging a hackathon, which is a contest in which hackers are invited to search for the vulnerabilities in the code of the project. Usually, the hackers that discover flaws in the code and possible solutions to them are rewarded by the smart contract owner.
Losses due to code flaws can be devastating to projects. So audits essentially help to make the community of users confident that such smart contracts are safe to use and that any data or funds put in it are safe.