Emily Clarke

The Importance of Auditing Smart Contracts

Smart contracts are an important part of trading and investing in the world of cryptocurrencies as they allow transactions to be executed automatically. With a smart contract in place, triggers are set to control buying and selling once a threshold is met or surpassed. This increases productivity and accuracy for investors, but for smart contracts to be effective, they need to be audited.

What is a Smart Contract Audit?

A smart contract security audit is an audit of the code behind a smart contract and the blockchain that the smart contract utilizes. Aside from auditing before a transaction is made, a smart contract security audit may be undertaken to check for vulnerabilities that can be exploited across a blockchain. Any errors that are discovered can then be passed along to the development team behind a blockchain so that bugs and vulnerabilities can be patched.

The Benefits of a Security Audit for Smart Contracts

Although catching bugs is a big benefit of a smart contract audit, these audits also build confidence and trust among investors. This is important since losing trust and confidence can have far-reaching effects on specific tokens and blockchains.

If a vulnerability exists and is not caught, it may even open up adjacent crypto technologies and exchanges to attacks. The impact of such attacks could shake confidence in the entire concept of cryptocurrencies, so auditors take a great deal of care when checking smart contract codes.

How Often Should Smart Contract Codes Be Audited?

The frequency of smart contract audits depends on several factors. An audit or multiple audits should be conducted after new smart contract technologies or blockchains are developed and released, but ongoing auditing is important as well.

Failure to regularly audit smart contracts and blockchains may mean that undiscovered exploits get found by malicious actors who can threaten the integrity of entire blockchains and all the transactions that run through them. Developers will likely have their means of auditing, but independent smart contract auditing firms may also be able to help. Involving an independent third party may also help to increase trust among investors, so it's worth looking into even if you plan to audit your code.

Author Resource:-

Emily Clarke writes about global equities markets, commodities prices, forex rates and more. You can find her thoughts at smart data software blog.