Cryptocurrency has a decentralized finance problem: It’s not very secure. Few cybersecurity experts dispute that the technology underlying cryptocurrencies – the blockchain – is secure. Wrapped in layers of encryption and verification, the distributed ledger resists attacks. Yet, this past year saw record-breaking hacking losses for cryptocurrency holders. Hardly a week passed without news of one pillaging or another, often accompanied by pleas from bereft account holders for the hacker to return their stolen funds, minus a hefty “white hat” reward. Holding cryptocurrencies in anything but a memory drive inside a box shielded with a Faraday cage was seemingly to tempt fate during 2022. And for that – apart from the outright (alleged) larceny behind the collapse of FTX – the cryptocurrency world in large measure can finger decentralized finance platforms, which ride atop the blockchain. 2022 saw a record breaking $3 billion stolen last year from those applications. One reason for the increase in DeFi hacking is that deposits rose exponentially from about $13 billion in late 2020 to $50 billion now, despite the ongoing crypto winter. Web3 hackers are no different from their peers across industries: they go where the money is, said Martin Derka, head of new initiatives at QuantStamp. The amounts can be eye popping. Digital thieves descended on cross-chain platform Nomad in August after discovering a flaw allowing transaction messages to be validated immediately instead of going through a verification process.
Full opinion : Crypto’s Decentralized Finance Security Problem.
