Cryptocurrencies have been in existence for over 15 years, but the sector continues to struggle with a persistent Achilles’ heel: inadequate security. Month after month, millions of dollars are stolen in audacious hacks, highlighting critical flaws that leave investors exposed. Decentralized finance (Defi) tends to be more susceptible to exploits compared to centralized platforms, and hacks are more common than fraud. In May, Ethereum and BNB Chain were the two most targeted networks, representing 62% of total losses.
The fact that the crypto industry has experienced 108 security breaches in just five months is alarming, especially with cybercriminals becoming more opportunistic in bull markets. It begs the question of what an overhaul in security would look like and how it would impact end users. There are several issues with the current security measures. It can be challenging to manually enter crypto transactions, with even the slightest typo resulting in irretrievable funds.
Furthermore, many users, including those experienced in crypto, fail to grasp the security implications, leading to numerous incidents of unsuspecting users losing substantial amounts of digital assets through impersonation or phishing attacks. There is a pressing need to replace crypto addresses with human-readable alternatives to enhance security and reduce friction in crypto payments. This infrastructure would also be reinforced by infallible automated address computation taking place in the background, potentially preventing phishing attacks and unauthorized withdrawal of centrally held funds. The industry also needs to acknowledge the broken nature of cross-chain integration, where moving wealth from one network to another is a convoluted and inefficient process.
Despite attempts to establish connections between chains, these platforms have proven to be vulnerable to exploits, as evidenced by the largest crypto heist in history orchestrated by North Korean hackers. A reevaluation is essential in the Defi space, where the lack of know your customer (KYC) checks or proof of identity has made it a safe haven for money launderers, and attackers can act with impunity. It is crucial to ramp up security and clamp down on breaches without compromising the user’s right to privacy. In order for crypto to earn its status as a legitimate financial system, it needs to undergo significant changes.
The industry must act promptly to prevent further security breaches that could tarnish its reputation and ruin lives.