How Cryptocurrency and Blockchain are Reshaping Supply Chain Security

Cryptocurrency in the supply chain. It may sound like something out of a futuristic sci-fi movie, but it’s already happening. Cryptocurrency like Bitcoin, runs on blockchain, a technology that is now shaking up industries left and right, and supply chain management is no exception. But as with any emerging tech, there are risks involved, especially when it comes to application security. Let’s break it down.

Big players across industries like retail, manufacturing, and food production are hopping on the blockchain bandwagon. This adoption has been largely driven by interest in potential benefits such as transparency, speed, and cost savings. Walmart, for example, uses blockchain to track produce from farm to shelf in near real-time, helping them respond to food safety concerns faster. The same goes for shipping giants like Maersk, which uses blockchain to streamline container logistics.

But as companies embrace blockchain-based solutions, they’re also opening up their systems to new threats. Developers building blockchain applications are at the heart of this transformation, and so are hackers looking to exploit vulnerabilities.

In supply chain management, cryptocurrency and blockchain technology work together to create decentralized, tamper-proof ledgers. Think of it like an open notebook that everyone along the supply chain can access but no one can alter without consensus. Payments can be made instantly with cryptocurrencies, contracts can self-execute through smart contracts, and every transaction gets recorded in a way that’s nearly impossible to fake.

Blockchain itself is considered highly secure due to its cryptographic foundation and decentralized nature. However, the applications interfacing with it are prime targets for hackers. A study by Positive Technologies found that 92% of blockchain applications contain critical security vulnerabilities. Some key risk areas include:

• Smart Contract Exploits: In 2016, the DAO (Decentralized Autonomous Organization) suffered a $50 million heist due to a flaw in its smart contract logic.
• API Attacks: APIs connect blockchain applications to external systems. If poorly secured, attackers can exploit them to steal data or alter transactions.
• Phishing and User Authentication Weaknesses: Supply chain stakeholders may inadvertently expose sensitive data through weak password practices or phishing scams.

The Role of Application Security Testing

The supply chain spans the globe, literally. From factories in Asia to warehouses in Europe and storefronts in North America, blockchain and crypto solutions must integrate with countless systems and applications. This web of connections creates a huge attack surface.

Take smart contracts as an example. They’re programs stored on the blockchain that automatically execute when conditions are met. While they’re great for eliminating middlemen, a poorly written smart contract can be exploited by hackers to siphon off funds or cause chaos in the supply chain. This is where application security testing tools like HCL AppScan shine, helping developers identify and fix vulnerabilities in the code before it ever goes live.

According to IBM’s 2023 Cost of a Data Breach report, the average cost of a breach is now $4.45 million, with supply chain-related breaches often costing even more due to ripple effects. When blockchain is compromised, trust in the entire supply chain collapses, disrupting operations and damaging reputations.

Tools like HCL AppScan, offer:

• Static Application Security Testing (SAST): Analyzes source code during development to detect vulnerabilities early in the software lifecycle, reducing risk before deployment.
• Dynamic Application Security Testing (DAST): Evaluates running applications by mimicking real-world attack scenarios to uncover exploitable vulnerabilities in real-time.
• Software Composition Analysis (SCA): Identifies security risks and licensing issues in third-party libraries and dependencies commonly used in blockchain applications.
• Penetration Testing: Conducts controlled, simulated cyberattacks to uncover and address weaknesses in blockchain environments, smart contracts, APIs, and connected systems.

Companies that adopt proactive security measures not only mitigate risks but also build trust with stakeholders, a critical currency in today’s interconnected supply chains. By proactively securing applications, companies can safeguard their blockchain ecosystems and protect sensitive data from being exposed—or worse, weaponized.

The Bottom Line

Cyberattacks are already costing businesses billions every year, and as supply chains become more dependent on blockchain, the risks will only grow. If a hacker compromises a smart contract managing supplier payments, it’s not just money at stake, it’s your entire operation. It is important to keep in mind that while blockchain might be “unhackable” at its core, the applications built around it are not.

Whether you’re a developer, a product manager, or just someone trying to wrap your head around the future of supply chains, one thing is clear: securing your applications is non-negotiable. Tools like HCL AppScan make it easier to get ahead of potential threats and ensure that blockchain doesn’t just revolutionize your supply chain but does so safely.