The criminal use of cryptocurrency was amongst the top three internet crimes in 2021. Owing to this, the first half of 2022 wasn’t in favor of crypto.
So far, we’ve seen the downfall of Terra Luna, loss of $1.4 billion through cross-chain bridges, loss of $615 million from Ronin, and countless more security incidents. Naturally, it shakes our trust in crypto.
Should we hold on? Or should we withdraw investments?
In this post, that’s what we’ll talk about. We’ll be studying:
- Existing crypto security measures
- Current and expected crypto security status
Let’s get to it!
Existing Crypto Security Measures
Here are some of the crypto security measures companies take today to prevent theft and make recovering lost bitcoin possible:
Currently, keys are the heart of crypto security. A key or seed is randomly generated with hundreds of digits. You get it in the form of a string of alphanumeric characters.
A wallet holds all your cryptocurrency, and the key provides access to it. Usually, crypto platforms ensure wallet/key safety by generating a unique address for every transaction. However, some companies have leveled up the security through these measures:
- Identity verification and background check
- Requirement of 2 signatures every time you want to spend the amount in the wallet
- Storage of keys with signing authority in unique locations
- Allocating redundant keys to wallets for recovery
All these practices reduce the risks of theft and data breaches by keeping both the crypto amount and wallet holder safe.
Having the best team of data specialists isn’t enough, and many companies understand this. Sometimes, an external assessment is necessary to identify potential risks that may have been missed by the in-house team.
This is why organizations often get their system checked by crypto security experts. They don’t only point out the potential risks but also offer custom solutions.
Even the best companies experience data breaches and attacks by cybercriminals. It’s impossible to avoid them when both the crime rate and value of crypto have been on the rise.
But an efficient way to deal with these unfortunate circumstances is to have a backup plan ready. What will the company do? How will the problem be identified, recorded, and solved?
All of these questions are answered in the backup plan. The most common example of this backup is the data sanitization policy, where information is removed from all storage devices and media.
Similarly, the key compromise policy contains the course of action that must be taken in case a key or its holder’s safety has been compromised.
What Has Happened So Far?
As mentioned earlier, the crypto industry has seen a lot of losses in the first half of 2022. To further understand the damage and intensity of security risk, here are the worst crypto attacks in 2022.
The Exploitation of Wormhole Bridge
A Wormhole is a bridge that enables owners of cryptocurrency to make transactions between various blockchain networks with ease.
In February 2022, an attacker managed to bridge and steal a total of 90000 ETH coins to his wallet. Wormhole noticed this exploitation the same day and compensated the stolen amount to the owners. But not all companies can return the amount immediately (study Terra Luna’s case).
The Exploitation of Beanstalk Farms
In April 2022, another attacker generated a proposal, which enabled him to transfer assets worth 1.2 million USD to his account. The restoration of losses hasn’t been much of a success for the company and the investors.
What Can We Expect?
Back in 2021, some experts predicted that in the first quarter of 2022, crypto (Bitcoin particularly) will witness massive highs. But another expert predicted that crypto will rise to 70000 USD at most by the end of 2022 (check out further details here).
As you can see, there’s a high contrast of opinions among experts, which tells us that the industry is truly unpredictable.
For that very reason, we won’t ask you to consider or rely on predictions. Apparently, it appears that the crypto market will need some time to recover. It may hit new highs by mid or late 2023 when transactional systems become more secure.
Predictions For Crypto Security 2023
By 2023, we expect improvements. The crypto industry will regain its momentum and hit new highs.
That’s because the authorities are taking necessary measures when it comes to crypto. Governments all around the world are actively taking measures to either embrace or eliminate cryptocurrency. The authorities are realizing the widespread popularity of this internet currency and are looking forward to creating safe financial systems for their citizens.
Some governments are doing so by banning the system, while other governments are investing in the development of crypto-friendly systems, wherein state rules and regulations will be implemented.
Every investor will have to register themselves with authorized entities before investing or making any transactions. In this way, governments will be providing added security to crypto and might also tax it.
But one thing’s for sure — the decentralized finance space will eventually eliminate risks for all. We might even have a DeFi space from Google or Amazon in the future. There will indeed be ups and downs, but as soon as governments or long-operating institutions develop a systematic approach, we’ll witness a steady growth graph for all.