Every innovation brings challenges. It lays new obstacles in front of us, and we need to find the best possible way how to deal with them. We have to come up with new ideas, perspectives, and ways of thinking to solve these issues and set secure and standardized solutions.
It is not easy, it is a hard path filled with experiments and failures. Sometimes we hit the wall and reach a dead end. Then we have to go back and start again. It sucks, but it is part of the process.
Blockchains
Blockchain itself is not interesting. It is just another data structure. But if you combine it with other tools, like consensus mechanism, cryptographical signatures, and others, it can create something interesting.
We witnessed the birth of the new payment system, which is completely decentralized. The platform is not dependent on any middle man, any single point of failure. But what if there is a vulnerability in the protocol itself?
So, is it safe? What does the safe means anyway? Is it secured? Is it accessible 27/7? Can I transfer my funds securely anytime? I think it might be the right definition for this article. Let’s sum up some issues which occurred in time and see how we treat the system further.
Bitcoin
Bitcoin is the original decentralized cryptocurrency. It is the oldest and most battle-tested crypto up to date. There were not many technical issues, but more like social-community dramas, like Segwit fork or the person of Craig Wright (a self-claimed Satoshi).
However, even Bitcoin had its issues. A complete list of the vulnerabilities can be found here. One of the most famous bugs was The inflation bug, which allowed the exploiter generate 184 billion Bitcoins in 2010. It led to a temporary chain split until the longest chain with a fix took over. Another interesting issue occurred in 2018 with Double spend vulnerability. The quick fix was released, but it took time to reach the majority of nodes.
Inflation bug is a threat to every chain, some might operate even without notifying it if no one looks. Or worse, it is even not visible, as in the case of Zcash.
Bitcoin survived these difficulties (maybe with good luck), and it is one of the most stable and battle-tested chains. Its uptime (above 99.98%) is tracked here.
Ethereum
Ethereum technology introduced programable blockchain and leveled up its complexity. The idea of a world computer that can run programs (smart contracts) in a decentralized way was amazing.
Ethereum was able to get the attention of the developers’ community and got traction. It opened doors to interesting decentralized products, such as DAOs, ICOs, DeFi, NFTs, and others. It also opened doors to smart contract exploits and new techniques for their development.
If we focus on Ethereum as a platform itself, the most difficult time might be The DAO hack in 2016. The Ethereum chain itself did not get compromised, but the famous reentrancy bug lead to a heist of 3.6 million ETH from The Dao contract.
The big discussion followed, and because it was around one-third of the total supply, the fork which eliminates the exploit started being discussed. Some people disagreed and fought for the “Code is law” approach and immutability. It led to the hard fork, which created Ethereum and Ethereum Classic (which decided to respect the hack).
Ethereum recovered from the hack (and fork) and become one of the strongest chains, if not the strongest. It delivers blockchain innovations, such as scaling techniques, burning fee mechanism, or implementations of ZK cryptography.
It can be scary for investors because every innovation brings some uncertainty and the threat of bugs. On the other hand, Ethereum uptime is 100% since the genesis block up to now. Ethereum has been a strong and well-working platform.
Unfortunately, it became expensive to use for small investors, which allowed the rise of alternative chains (less or more successful), in many cases based on the Ethereum code. However, the L2 solutions can bring usage back to the Ethereum ecosystem, once it gets wider adoption.
Solana
Solana introduced a super-fast, cheap, and scalable network. Solana had an incredible price rise from 0.5 USD in early 2020 to 260 USD in late 2021. It got attention also because of multiple crashes. Unfortunately, the network was not robust enough and faced even 6 outages in one month.
I have to admit I do not follow developers’ discussions and ideas. I got only a basic overview. I tried to use the chain, and it worked OK-ish. The marketing about decentralization is at least questionable.
I see a marketing push in Solana. Of course, a lot of money is backing the project. It can evolve into a successful project, but it is still very immature. All the marketing statements like “main net — beta”, and “developed in Rust and thus secured” just recall 2017. The scalability and decentralization are big questions, too. Once/If Solana will evolve enough, it can be a serious competitor to Ethereum.
Cardano
Cardano is a product of 2017’s ICO boom. It built a Proof of Stake chain focusing on smart contracts and tokenization. It is easy to use, fast, and cheap platform.
It was born as the Ethereum of Japan. Some rumors say its original focus was online gambling, but I can not find anything about it. Marketing started labeling it as the first peer-reviewed blockchain.
It went even further with Haskell and functional programming as the most secure and “bug-proof language”. Blaming OOP on security flaws sounds very stupid to me. The beginning of smart contracts brought some attention, as it showed, that functional programming can not solve everything. However, it seems that Cardano was able to move forwards. And it seems to be pretty stable, too.
Polygon
Polygon is an Ethereum side chain with a couple of features. It was a great platform for some users when Ethereum was expensive. It managed to attract many projects and offered a similar feel to Ethereum interaction.
What could go wrong here? Polygon faced a couple of issues. To name some, there was a critical bug on their Plasma bridge. It put into danger $850 million. Luckily enough, it was not exploited. Recently, the network faced block reorganization and later suffered 11 hours of outage due to a bug in the upgrade.
Iota
Iota designed its network as a directed acyclic graph, with a data structure called the Tangle. The main focus was on microtransactions and IoT. It means fast and cheap (originally feeless) transactions.
The consensus is achieved via the central node, The coordinator. That goes against the idea of decentralization and elimination of a single point of failure. Iota promises to remove it once the network matures. Some argue if it is even possible.
Iota had its first security drama in 2017. DCI labs scientist successfully broke the EU-CMA security, but Iota disputed the result. The hardest time came in 2020. The network was shut down after a 2 million USD hack. The further Firefly upgrade in 2021 was not better when some users lost access to their funds for a couple of months (April-August I believe).
Also, Iota faced a few DDoS attacks, because of its feeless transactions. It tries to bring smart contracts, but who knows what will pop up next.
Summary
There are many cryptocurrencies with smaller or bigger issues. We can see that even the most reliable ones had some problems they needed to solve. Every innovation introduces new obstacles, and it is on us how we deal with them.
We should follow how responsible teams can resolve the issues and how honest they are with their explanation. We can not exclude that critical vulnerability will appear again. But the strongest teams proved their qualities and handle these situations well (at least Bitcoin and Ethereum).
I chose described project randomly based on my poor memory. The main idea is not to promote or trash any of them. The main idea is to show, that every project had hard times and had to deal with them. It is hard to say if any cryptocurrency is safe. It is up to you to decide where is your line.
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