It's Security, Stupid

Image Source: Pexels
 

This past week saw one of crypto’s biggest ever exploits revealed. Axie Infinity, the Vietnam-based NFT gaming platform that has set the standard for this new crypto sub-genre, saw its Ronin Bridge exploited for more than $600 million. This was a complex hack, where the exploiters used stolen private keys to forge fake withdrawals to drain everything sitting inside the Ronin bridge in just two transactions. Perhaps most interestingly, the hack also happened on March 23, yet was only discovered on Tuesday - six days later - after a user flagged an issue with an ETH-X withdrawal. 

Meanwhile – in one of the most bizarre turn of events seen among crypto exploits in recent years – the hacker that exploited the Cashio DeFi protocol for $52 million last week is now asking victims to tell them why they should get their money back, explicitly stating that "rich Americans and Europeans that don’t need the money, won’t get it back."

These and other recent exploits show the breakneck pace that security is being forced to evolve in the cryptocurrency space. Perhaps nowhere else in the global economy is security having to adapt and grow as fast as it is in crypto, with hackers and developers in a relentless but silent war in the background at all platforms doing battle over user assets. There is little doubt that in years to come the world’s biggest digital security revolutions will come from the cryptocurrency space. 

It also underlines the risk that still exists in the sector, and why it’s really important to choose your platforms and providers wisely. Sometimes, though, there’s not much to be done. In the four short years since its founding in 2018, Axie Infinity’s parent company Sky Mavis has - incredibly - grown to become the fifth largest gaming company in the entire world by market cap, bigger than Take-Two Interactive (TTWO), Zynga (ZNGA), and Ubisoft (UBSFY), yet its size and resources did not make it hack-proof. 

In a demonstration of maturity, though, soon after the exploit was discovered, Axie quickly issued a joint statement with Ronin Network to provide full transparency over the hack and to reassure users that all remaining assets have been secured. Of course it did not stop Ronin's token crashing by 20%, but it does show that crypto companies are leading in terms of transparency and communication as well as security. Companies in traditional finance and the wider global economy could stand to learn a thing or two.

Some other thoughts...

Will the inflation bogeyman finally buoy Bitcoin (BITCOMP)?

• Global Inflation is now running rampant, with the UK posting a 30 year high of over 6% this week as the US battles price rises of over 7%
• Meanwhile bitcoin is hitting year-to-date highs
• Inflation has long been held-up as the raison d’être of owning bitcoin, which many have always claimed is a hedge against inflation
• BUT, to date bitcoin has pretty much moved with markets
• Could this be the moment we see the prophecy come true?
• In Sudan, which has been battling triple digit inflation since the military coup last year, the government is now warning citizens against using cryptocurrency
• No doubt we'll see other governments try to prevent citizens from preserving their wealth by ditching increasingly worthless fiat currencies in favour of crypto