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The CrowdStrike Outage: What Happened and How Blockchain Technology Could Have Prevented It

July 24, 2024

crowdstrike and blockchain technology; kelly reddington and jason guthrie for WisdomTree Prime blog; Bitcoin; DePIN
Kelly Reddington

Kelly Reddington

Marketing and Research Analyst

Jason Guthrie
Jason Guthrie

Director of Capital Markets, WisdomTree Europe

Recently, CrowdStrike, a leading cybersecurity firm, experienced a significant outage due to a defect in an update to one of its services. This issue caused Microsoft Windows PCs to crash displaying the infamous blue screen of death, affecting businesses and services globally, including airlines and governmental bodies. While CrowdStrike has identified and is addressing the problem, this incident highlights the vulnerabilities inherent in centralized systems.

What Went Wrong?
On July 19, 2024, at 04:09 UTC, CrowdStrike released a sensor configuration update1 for its Falcon platform targeting newly observed malicious activities involving named pipes. Named pipes are used for interprocess communication in Windows systems. The update, however, contained a logic error in Channel File 2912, which caused Windows systems running the Falcon sensor version 7.11 and above to crash and display the Blue Screen of Death (BSOD). This affected systems that downloaded the update between 04:09 and 05:27 UTC, resulting in widespread disruptions globally.3

How Blockchain Technology Can Prevent Such Outages

Blockchain technology and decentralization offer robust solutions to mitigate the risk of such outages. Here’s how:

1. Distributed Infrastructure

Blockchain networks operate on a distributed infrastructure where data and operations are spread across multiple nodes worldwide. This means that if one node fails, others can continue to operate seamlessly. A pertinent example of the resilience of decentralized infrastructure can be seen in the Bitcoin network. When China imposed a ban on Bitcoin mining, which forced a significant portion of the mining operations offline, the network did not collapse.4 Instead, it adjusted dynamically as mining operations shifted to other countries.5 The decentralized nature of Bitcoin's infrastructure ensured its survival and continued operation despite the ban.

In the case of CrowdStrike, a decentralized network could have ensured that even if one node applied a faulty update, the rest of the network would remain unaffected, maintaining service continuity.

2. Immutable and Transparent Data

Blockchain's immutable ledger ensures that all updates and changes are recorded transparently. This immutability means that any attempt to introduce a defective update would be visible to the entire network and could be stopped before it causes widespread issues. This transparency would prevent a single point of failure from propagating throughout the system.

A relevant example is the recent upgrade by the Fantom Foundation from its Opera chain to the new Sonic technology.6 The transition was strategically rolled out, ensuring that validators could update smoothly without causing disruptions.7 If a defective update had been detected, the transparent nature of the blockchain would allow for immediate identification and rollback, protecting the network from widespread issues.

3. Enhanced Security

Decentralized systems leverage consensus mechanisms, requiring multiple nodes to agree before an update is applied. This consensus process ensures that updates are thoroughly vetted, reducing the likelihood of faulty updates being deployed. In CrowdStrike's case, this would mean that the defective update would have been identified and rejected by the consensus process, preventing the outage entirely.

4. Automated Response with Smart Contracts

Smart contracts can automate the deployment, verification, and rollback of updates based on predefined conditions. This automation reduces the reliance on manual processes and human intervention, which can introduce errors. For instance, a smart contract could automatically halt the rollout of an update if it detects a certain threshold of errors, quickly mitigating any potential issues.

5. Peer-to-Peer Communication

Blockchain enables direct peer-to-peer communication, bypassing the need for centralized servers. In the event of an issue, nodes can continue to communicate and share critical information directly with each other. This decentralized communication network ensures that operations can continue smoothly even if parts of the network are compromised.

6. Code Variations and Version Control

Even with decentralized infrastructure, rigorous version control and code variations are essential. Updates should be tested thoroughly in a development environment and not in production. Regular code audits and stringent testing protocols enhance the reliability of updates and ensure that any defects are caught early.

DePIN: The Future of Resilient Infrastructure

Decentralized Physical Infrastructure Networks (DePIN) offer a robust alternative. By distributing resources across independent nodes and leveraging geographic diversity, single points of failure can be eliminated and resilience achieved. Data replication across multiple nodes ensures built-in redundancy, maintaining service continuity, even during disruptions such as updates.

Conclusion
The recent CrowdStrike outage underscores the vulnerabilities of centralized systems. By adopting blockchain technology, the principle of decentralization, and DePIN solutions, companies can build more resilient infrastructures that are less prone to such failures. Distributed networks, transparent and immutable data, enhanced security through consensus mechanisms, automated responses with smart contracts, peer-to-peer communication, and rigorous code management all contribute to a robust system that can prevent widespread outages. As the digital landscape evolves, integrating these decentralized principles will be crucial for maintaining the reliability and security of critical services.

Sources

1"CrowdStrike discloses new technical details behind outage." SC Media. Retrieved from SC Media

2"Technical Details: Falcon Update for Windows Hosts." CrowdStrike Blog. Retrieved from CrowdStrike

3"Widespread IT Outage Due to CrowdStrike Update." CISA. Retrieved from CISA

4Rooney, Kate. "Bitcoin mining is now easier and more profitable as algorithm adjusts after China crackdown." CNBC, July 5, 2021. Retrieved from CNBC

5"Bitcoin mining adapts to China crackdown." Reuters, July 20, 2021. Retrieved from Reuters

6"Sonic status." Fantom Foundation. Retrieved from Fantom Foundation

7"Sonic and Beyond: A New Era of Blockchain Innovation." Fantom Blog. Retrieved from Fantom Blog

About the contributors

Kelly Reddington

Kelly Reddington

Marketing and Research Analyst

Kelly Reddington is a Marketer and Research Analyst at WisdomTree, specializing in digital assets and the evolving financial infrastructure. He plays a key role in product marketing, executive communications, and content strategy for WisdomTree's digital assets initiatives, helping articulate the firm's vision for the future of tokenization and onchain finance. Prior to joining WisdomTree, Kelly built a career at the intersection of cybersecurity, marketing, and blockchain technology. He holds a degree in Business Administration and Marketing from the University at Buffalo. With a passion for crypto, DeFi, and emerging financial technologies, Kelly brings a unique perspective to how these innovations are communicated and understood by both institutional and retail audiences.

Jason Guthrie
Jason Guthrie

Director of Capital Markets, WisdomTree Europe

Jason Guthrie is Head of Digital Asset Product and Head of Digital Assets for WisdomTree in Europe. Guthrie oversees WisdomTree’s digital assets efforts which include bringing new products to market, identifying opportunities to enhance existing products, driving distributions strategies, and leading on client education and engagement on cryptocurrencies. He is responsible for efforts beyond the traditional product set and is actively pushing the digital asset agenda by pursuing alternative and strategic projects. Previously Guthrie was head of Capital Markets for WisdomTree in Europe for 4 years, where his team was responsible for ensuring clients had a smooth trade execution experience. Prior to joining WisdomTree, Guthrie worked at Deutsche Bank’s ETF Capital Markets group as well as Macquarie Bank as an Investment Executive based in Sydney, Australia. Jason holds a Bachelor of Commerce (Finance) from Macquarie University in Sydney.

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