Vulnerabilities in the Security of Cryptocurrencies
The past year has seen two of the largest crypto heists on record. One of them is the robbery of $ 600 million from the famous cryptocurrency game system Axie Infinity.
Mr. Karpeles said the “structural risk” behind the bridge technology, which plays an important role in connecting Axie and other crypto services, makes it easy for hackers to penetrate the system.
In the case of Axie Infinity, the attacker took control of a small number of computers, called validators, in the bridge system whose job is to verify withdrawals and deposits of cryptocurrencies. The role of a validator is to keep the blockchain safe. However, validators can also be hacked to commit fraud or theft.
“Bridge has to be trustworthy, but anything that requires trust is vulnerable,” Karpeles said in an interview. Karpeles also added that technology must advance to eliminate the need for validators in transferring data between different blockchains.
The attack highlights the potential pitfalls of the cryptocurrency even as it has grown into a $2 trillion industrial day. On April 6, Sky Mavis, the developer of Axie Infinity, admitted that the root cause of the attack was partly down to authenticators.
“Companies haven’t seen the benefits of improved security yet. They don’t know the cost of being hacked until they’re actually hacked. So they don’t have the budget for it,” said Mr. Kerples. confidentiality”.
Launched in 2010, Mt. Gox was once the largest Bitcoin exchange in the world, processing up to 80% of global transactions at its peak. The company filed for bankruptcy in 2014 after a hack resulted in the loss of approximately 850,000 Bitcoins with a value of about $480 million at the time. While most of the Bitcoin was lost from exchanges, around 200,000 coins were eventually recovered from the company’s cold wallet, which is not connected to the network.
Creditors could not agree on a payment process leading to a multi-year litigation. As the price of Bitcoin continued to rise, claimants demanded payment in Bitcoin instead of cash. In 2017, the company converted 50,000 Bitcoins to cash to pay its first creditors.
In 2021, the Tokyo District Court and the creditor came to an agreement to distribute the remaining 150,000 Bitcoins, worth about $6.5 billion at the transaction price on April 7, to the remaining 200,000 creditors worldwide. .
The timing of the return will be closely watched by investors over concerns that too-quick delivery could lead to a sell-off. And this will likely bring down the price of Bitcoin.
Once the refund was settled, the story of Mt. Gox will officially end.
Source: Nikkei Asia
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