Can crypto's blockchain technology stand the test of time?

 Can crypto's blockchain technology stand the test of time?

Two days ago, Binance, the world's largest cryptocurrency exchange, admitted that hackers stole nearly $100 million worth of cryptocurrency from the blockchain bridge that runs on the BNB chain (formerly known as the Binance Smart Chain). , then its blockchain suffered a double blow.

A blockchain bridge is a device used to transfer cryptocurrencies between different applications running on the blockchain.

However, Binance's misery did not end there. Later, BNB Chain said in a blog post that a total of two million tokens of their cryptocurrency BNB – approximately $570 million worth – had also been withdrawn by hackers.

The BSC Token Hub is the bridge between the BNB Beacon Chain (BEP2) and the BNB Chain (BEP20 or BSC).

— CZ Binance (@cz_binance) 1665100533000

The current impact estimate is approximately USD 100 million, which is almost a quarter of the previous BNB burn.

— CZ Binance (@cz_binance) 1665101145000

The year has been particularly challenging for crypto exchanges around the world, with many countries tightening their laws on crypto trading, some such as India imposing high taxes on profits, and some calling for a complete ban on crypto. has done.

There is no doubt that the basis of blockchain as a technology is impressive, as it provides an opportunity to do away with middlemen such as banks. But decentralization brings its own set of problems, such as high energy costs, low speed, and of course - hacks.

Blockchain projects are known to be highly secure, but several hacks this year have exposed flaws in the armor. According to blockchain data platform Chainalysis, over $1.6 billion worth of cryptocurrency has been stolen from users in 2022.

Six of the seven biggest cryptocurrency hacks to date have occurred in the past two years, with the Ronin Network ($625 million, 2022), the Poly Network ($611 million, 2021) and Binance ($570 million, 2022) topping the charts.

Are crypto blockchains impenetrable?

It is important to understand the difference between cryptocurrency and blockchain. The former is a decentralized use case of the latter. In simple words, crypto is a small but important part of what makes blockchain possible.

Cryptocurrencies, which are decentralized digital assets, use cryptography to ensure secure transactions between different parties. Such transactions are recorded and stored in a digital ledger called a blockchain.

While blockchains themselves are virtually immune to hacking, the vulnerabilities outside these digital ledgers provide opportunities for thieves, especially when it comes to crypto transactions and wallets.

It is not impossible – as seen in many hacks over the years – for hackers to gain access to cryptocurrency owners' wallets and use their private keys – to sign transactions and prove ownership of blockchain addresses. Required passcode for - To steal crypto.

There is also a way that a blockchain itself can be compromised - the so-called 51% attack. In theory hackers can take over a blockchain by controlling the majority of the blockchain's computational power, which is called its hash rate. If they have a hash rate above 50%, they can offer a converging blockchain.

This allows them to make changes to transactions that were not confirmed by the blockchain prior to their taking over. Although this type of attack is theoretically possible, it is extremely difficult to execute in practice.

But with various central banks around the world getting tougher on crypto, massive hacks like last week don't bode well for the crypto community as they deter investors.