Why Crypto Needs Better Cybersecurity To Thrive
In under a century, how people pay for goods has undergone dramatic evolutions. Beginning with gold-backed, paper money, society then embraced digitized, un-backed fiat. Now we’re in the early stages of adopting blockchain-based cryptocurrencies.
The latest iteration of value exchange has the potential to democratize the financial industry by linking individuals in a faster, cheaper, and more interconnected, digital economy. The benefits have already accrued: immigrants to the U.S. are increasingly leveraging bitcoin to overcome financial barriers and optimize remittances, while Ukraine has raised millions in global cryptocurrency donations to support its defense against the Russian invasion. Unfortunately, like most innovative, new technologies, nefarious actors will find ways to exploit it. Crypto is not immune to cybercrime, and must be controlled before society at large accepts the new currency and its positive benefits can scale.
In early April, the play-to-earn crypto game, Axie Infinity, announced that $625 million in assets were hacked and another digital thief exploited a security flaw in the cryptocurrency platform, Wormhole, stealing close to $325 million. Meanwhile, the U.S. Department of Justice this year recorded its largest-ever financial seizure in the arrest of a modern-day Bonnie & Clyde over conspiracy to launder crypto, but the seizure happened six years after the theft occurred and left nearly a billion dollars unaccounted for. Too little, too late. According to Chainanalysis, a blockchain and crypto watchdog, cybercriminals stole a record $14 billion worth of cryptocurrencies in 2021, nearly double the 2020 figure. In the first quarter of 2022, crypto losses due to hacks and fraud were up 695% from the same period last year. Without better understanding and protection of private liabilities on the blockchain, trust in digital assets will begin eroding alongside value.