How serious is the cybersecurity issue with crypto? Well, just peruse the headlines. A study that stated North Korean hackers had their best year ever in 2022 and had already stolen $200 million this year was released at the start of last week. These hackers steal cryptocurrency to fund the nuclear weapons projects of their insane ruler. This happened at the same time as reports that the cryptocurrency gaming platform Stake had been robbed for $42 million. To cap off the week, con artists gained access to Ethereum creator Vitalik Buterin’s X (previously Twitter) account and used it to promote a cryptocurrency giveaway in order to steal close to $700,000.
These most recent events come as no real surprise. Since the early days of Bitcoin, hackers have taken advantage of the blockchain’s semi-anonymous feature to steal from users, businesses, and one another. Massive looting has been a feature of the industry just like Lambos and poor tattoo choices, from the disastrous hack of Mt. From the Gox debacle in 2014, to Bitfinex’s situation in 2016, all the way to Axie Infinity’s unfortunate “whoops, we misplaced $600 million” incident just last year.
The issue is that, despite learning some harsh lessons the hard way for more than a decade, crypto’s online weaknesses seem to be getting worse. The most recent round of hacks reflect poorly on a sector that is working to regain investor trust following last year’s FTX fiasco and won’t win over the U.S. government, which is reasonably concerned that cryptocurrency is funding Kim Jong Un’s military.
To be fair, cybercrime does not only affect the cryptocurrency sector. Additionally, hospitals, state governments, and even Fortune 500 firms have been victims of cybercrime. Furthermore, it is difficult to defeat hackers supported by a nation-state, such as North Korea, but also China, Russia, and Iran.
However, it seems that the cryptocurrency sector might work harder. Too many cryptocurrency companies have given security a low priority by prioritising get-rich-quick schemes over less glamorous tasks like auditing code and defending against phishing, despite the fact that analytics companies like Chainalysis and TRM regularly collaborate with senior law enforcement officials to trace and occasionally capture stolen assets.
Things are probably going to get worse in the near future. This is partly because nation-state-sponsored hackers are becoming more adept at stealing digital assets, but it’s also because since Elon Musk acquired control of X, frauds have become simpler to conduct. Despite stating that he will remove bots and criminals from the network, the billionaire has made it simpler for scammers to operate erratically by doing away with its long-standing verification system.
It won’t be long until we find out about the next terrible hack. In order to strengthen their defences, blockchain initiatives must collaborate better with one another and, yes, the government, if the industry wants to buck this trend.