In 2022: $1B in Crypto Blockchain Bridge Heists, Growing National Security Concerns and the Secure Blockchain Initiative
In OODA CEO Matt Devost’s annual OODA Alamanac posting for 2022 – OODA Almanac 2022 – Exponential Disruption – one of his strategic forecasts was concerned with the future of Web3 and crypto: “Many Web3 and cryptocurrency initiatives will encounter consequential cybersecurity issues in 2022 that will impact public adoption and invite increased regulatory pressure. While Bitcoin, Ethereum, and other technologies allow for true decentralization, there is a middleware ecosystem emerging in the form of marketplaces and exchanges that are based on Web2 technologies that are being deployed without proper consideration for cybersecurity best practices. These are areas where traditional cybersecurity practitioners and specialized red teaming can help but are rarely being engaged.”
In a February post, Matt also extended this analysis to Bitcoin and national security risks – including the impact on the U.S. dollar as the global reserve currency, the lack of tracking granularity, the ongoing use of bitcoin in ransomware and consumer fraud, the lack of fiduciary/legal liability, and the risk posed by overregulation of the space in the U.S.
Cybersecurity and the Blockchain
Matt’s forecasts and national security concerns have only been further distilled and validated by the role crypto is playing in the current conflict in Ukraine – with the EU targeting crypto wallets in the latest round of Russia sanctions and the U.S. imposing sanctions on the Russian darknet market and crypto exchanges. According to reporting by Reuters, the U.S. Treasury Department “has also reached out to cryptocurrency companies about their cybersecurity controls amid concerns that Russia could wage retaliatory cyber attacks in response to Western sanctions…In a sign U.S. regulators see the ballooning cryptocurrency industry as a growing source of systemic risk, U.S. Treasury officials have also been in discussions with cryptocurrency exchanges and trade groups to ensure U.S. digital assets are safe.” (1)
Like our broad research and analysis efforts in Q321 and Q421 regarding dis- misinformation and cognitive infrastructure, this year we embark on what academia calls a “literature review” on the topic of crypto and blockchain security initiatives which, in the case of OODA Loop, begins with tracking down the best-in-class research efforts and subject matter experts to explore how they are “framing and naming” the formative core issues surrounding the topic. The research area is nascent and shows great promise – but there is some heavy lifting in the early stages in order to wrap our brains around the challenges ahead.
Based on the recent release of our Web3 Cyber Incident Database, the 2022 OODA Loop research agenda will be prioritizing the tracking and analysis of efforts to address cybersecurity initiatives specific to the blockchain, crypto, and Defi. Blockchain in particular shows great promise for the future of identification and security protocols. For now, however (and consistent with Matt’s analysis), what trumps the potential cybersecurity applications of the blockchain is the conventional wisdom that the entire crypto ecosystem has serious middleware challenges – and growing direct security vulnerabilities in the blockchain design and architecture itself.
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