The month of October has not been kind to Bitcoin, with $730 million lost due to 18 breaches alone, bringing the total loss to $3 billion by 2022.
With decentralized finance or DeFi, as the major target, it’s becoming a serious enough issue that blockchain analytics firm Chainalysis, which specializes in tracking cryptocurrencies, may have been too hasty in naming 2021 The Year of the Hack.
“What’s unique about the crypto sector lately is the speed with which hacking is expanding,” said Kim Grauer, Chainalysis’ head of research.
“But that’s not what we’ve seen,” she continued.
Instead, 2022 is just $220 million away from shattering the previous year’s record of $3.2 billion in stolen funds.
Grauer also said that DeFi is in danger.
“The reputational risk is significant,” she explained. “I cannot emphasize this more. Because a hack occurs every day, every trader and DeFi participant is aware that they may be a victim of one. That is not good for long-term growth. That is detrimental to the industry. That is, in fact, one of the primary reasons why people are reluctant to enter DeFi and test the waters.”
The more things change, the more they stay the same.
Simultaneously, Grauer stated that the difficulty is not insurmountable, as seen by the rarity of assaults on centralized exchanges.
That was not the case “only a few years ago in 2019,” when centralized exchanges were being compromised at an alarming pace.
She said that DeFi is learning the value of thorough and ongoing code audits, as well as other technical solutions. Another reason is that organizations, particularly DeFi developers, cannot afford to put off commencing code audits and implementing other security measures. This can be more problematic for DeFi initiatives, which, while decentralized, may have voting procedures that need some level of consensus.
According to Grauer, hacking is not unique to the cryptocurrency business, citing hacks, phishing tactics, and even old-fashioned bank robberies that traditional finance, or TradFi, has experienced since its inception.
