Users as cryptocurrencies’ weak point?
Two weeks ago, we saw the biggest hack in cryptocurrency history. Ronin Network, owned by Vietnamese firm Sky Mavis, lost $614 million worth of cryptocurrency.
It will be interesting to see what the hackers do with all this money, as the two previous biggest hacks (Poly Network worth 611 million and Coincheck worth 547 million) both failed on the grounds that the hackers could not turn the stolen cryptocurrencies into fiat. While it is impossible to know who owns the wallets, the addresses and their balances are on the blockchain for all to see. Thus, exchanges need only to refuse to trade with these addresses and let the criminals choke on their immeasurable, useless wealth.
But how did this hack happen in the first place? A critical flaw in the code? Burglary of the servers? Nope. When its user base grew to such a size that Ronin Network couldn’t effectively authenticate all new clients, it decided to loosen procedures so it wouldn’t lose clients. You don’t have to be Satoshi Nakamoto to figure out what happened next. The scammers used these loose procedures to infiltrate the exchange, laid low for a while, and then struck.
It is worth pointing out the similarities with a much worse tragedy, albeit caused by the same arrogance, greed, and recklessness. Just as Chernobyl does not mean that nuclear power is inherently dangerous, the Ronin hack does not show that there is anything wrong with cryptocurrencies. But in both cases, rationality fell victim to short-sighted individuals unable to respect set security processes.
First TIME article about cryptocurrencies
In April 2011, TIME magazine published its first article about Bitcoin. There, the author wrote that Bitcoin could (one day) compete with banks and payment companies (Visa should be afraid, he claimed) and allow people to make payments impossible in their country for legal reasons. He specifically mentioned the ban on online gambling in the US, a hot topic at the time.
However, the article was surprisingly objective for how early in Bitcoin’s history it was written and for a very mainstream magazine. It mentioned the many advantages of Bitcoin, such as the greater privacy it provides or the ability to circumvent the censorship of totalitarian regimes, objectively described how successfully it dealt with the until then intractable problem of authenticating transactions without a third party and compared it to previous failed attempts at digital currencies such as “e-gold” (which Bitcoin essentially replaced as the primary currency of the darknet).
You should definitely read the article, if only as a way to visit a virtual museum. And although some parts of it seem silly now (for example, Bitcoin’s total value of $5 million), who knows how we’ll be thinking about Bitcoin and cryptocurrencies in another ten years.
What’s going on with Probinex?
As far as Probinex news is concerned, we have prepared a new service that some of you already know about: StayKing. Staking is a well-known practice in crypto, where you lock your cryptocurrencies into a Smart Contract, an algorithm on the network, for a period of time and get regular rewards for it. The Smart Contract is completely transparent and once you enter it, there is nothing you or we can do until it expires. This means security and reliability for you, for us, and for anyone thinking of joining our project. Victory on all fronts.
Sow fear and reap low returns
Stock exchanges can find themselves in a vicious cycle where the price goes down because people sell and people sell because the price goes down, and so on and so on. As always, panic is our worst enemy, so the key is to stay calm. One way to protect us from these emotions is using semi-automated trading algorithms, such as those we use here at Probinex.