Crypto losses to bad actors have significantly increased in the last two years, but cybersecurity experts believe there is no cause for concern, as most new tech is exploited during the early days of its use.\u00a0<\/p>\n
According<\/a> to blockchain security firm CertiK\u2019s annual Web3 security report for 2022, malicious actors drained<\/a> over $3.7 billion in value from Web3 protocols last year, representing a 189% increase over the $1.8 billion lost in 2021. <\/p>\n CertiK\u2019s report for the first quarter of 2023<\/a> also revealed that hackers accessed over $320 million in the first three months of the year. <\/p>\n Kang Li, the chief security officer at CertiK, told Cointelegraph that new technology is often a target for exploitation and the crypto industry is just the latest to suffer from its own success.\u00a0<\/p>\n \u201cAs new technologies emerge, they often become targets for malicious activities, simply because they present new vulnerabilities and possibilities for exploitation,\u201d Li said.<\/p>\n \u201cThis has been seen throughout history, from the early days of the internet to the rise of email and, more recently, with the advent of blockchain and cryptocurrency,\u201d he added. <\/p>\n According to Li, because the industry is still relatively new and rapidly evolving, some players are more focused on growth and innovation than on security, making them vulnerable to attacks and potentially contributing to the large number of losses recorded. <\/p>\n Data gathering platform Statista predicts<\/a> that the crypto industry, which has seen massive growth since 2017, will keep expanding, with revenue projected to reach $64.87 billion and total global users expected to hit 994 million by 2027. <\/p>\n Li says this rapid rise in users and revenue, combined with some of the industry\u2019s innovations, could also contribute to protocols being exploited.\u00a0<\/p>\n \u201cBlockchain technology and the smart contracts that underpin many cryptocurrencies are highly complex; this complexity can create security vulnerabilities that skilled hackers can exploit,\u201d he said, adding, \u201cCryptocurrencies also hold real value and can be exchanged for traditional currency in many places around the world; this makes them an attractive target for hackers who can transfer and potentially liquidate stolen cryptocurrencies quickly.\u201d <\/p>\n In the long run, Li says, as security around the crypto space improves and Web3 matures, we will see a decrease in successful hacks, exploits and scams.<\/p>\n However, he thinks it will always be a continuous battle between bad actors and blockchain security experts as they both fight to achieve their goals in an ever-changing industry. <\/p>\n Recent: <\/em><\/strong>Debunking the myth: Cryptocurrency is used for criminal activity<\/em><\/strong><\/a><\/p>\n \u201cIt\u2019s essential to note that while hacks and exploits pose serious risks, they should not deter us from appreciating the enormous potential and innovative capabilities of blockchain and cryptocurrency technology,\u201d Li said. <\/p>\n \u201cRather than a cause for retreat, they should serve as a clarion call for us to redouble our efforts to ensure that these transformative technologies can be used securely and responsibly.\u201d<\/p>\n Artificial intelligence (AI) has become a hot topic in the last year, with some pointing out its potential implications for the workforce<\/a>, while others, including tech entrepreneur Elon Musk, advise caution around its development<\/a>. <\/p>\n Li believes it\u2019s likely that as AI becomes more widely used, it will experience its own security issues, just like Web3 and other forms of transformative technology.<\/p>\n According to Li, as AI becomes more ingrained in our daily lives, especially in security-sensitive areas such as autonomous vehicles or financial systems, the potential for hacks, exploits and scams will likely increase.<\/p>\n Recent: <\/em><\/strong>EU legislators call for \u2018safe\u2019 AI as Google\u2019s CEO cautions on rapid development<\/em><\/strong><\/a><\/p>\n \u201cAI systems can be exploited in several ways, from manipulating machine learning algorithms to data poisoning and adversarial attacks,\u201d he said. <\/p>\n \u201cThere are also discussions happening around sensitive data leaking out of large language models, as humans interact and share information with AI chat platforms like ChatGPT,\u201d he added.<\/p>\n Omer Greisman, head of security services at blockchain cybersecurity firm OpenZeppelin<\/a>, told Cointelegraph that it\u2019s still early to judge if bad actors will flock to exploit AI. <\/p>\n He says there is no immediate financial incentive at this stage, with most malicious activity focused on direct financial gain and no clear payoff yet for exploiting an AI. <\/p>\n \u201cHowever, certain AI capabilities may facilitate a more sophisticated suite of attack vectors,\u201d Greisman said. <\/p>\n \u201cIt\u2019s also true that machine learning can be leveraged by security researchers to scan smart contracts to find vulnerabilities more efficiently,\u201d he added.\u00a0<\/p>\n Greisman believes the crypto industry can still be considered nascent, so some \u201cgrowing pains\u201d are unavoidable. <\/p>\n He says that the rapidly evolving nature of the crypto industry means that security measures and best practices are still being developed and implemented, and users are still learning how to use the tech safely, which makes them easy targets for exploitation. <\/p>\n \u201cThe nature of smart contracts, in that they are open and visible for anyone to interact with, also means that the blockchain can be an attractive target for attackers,\u201d Greisman said. <\/p>\n \u201cWhereas traditional financial systems can rely on additional layers of security via centralized servers, a smart contract\u2019s sensitive functions are potentially visible to any user. If there is a bug in a deployed contract, it can be called by anyone at any time,\u201d he added. <\/p>\n Greisman says with time and experience, and as security measures in the crypto space continue to improve, hacks and exploits will likely decrease, especially if a conscious security-first approach becomes the new standard.<\/p>\n He notes decentralized finance (DeFi)<\/a>, in particular, has become more cautious and rigorous in its security approaches, with some platforms now implementing multisignature wallets and time locks for contract upgrades, reducing the risk of unauthorized access and malicious modifications. <\/p>\n Recent: <\/em><\/strong>Missing DeFi security layer found in a new company release<\/em><\/strong><\/a><\/p>\n \u201cThe industry has already witnessed significant advancements in security practices, such as the widespread adoption of security audits for smart contracts,\u201d Greisman said. <\/p>\n \u201cAlso, bug bounty programs encourage ethical hackers to find and report vulnerabilities rather than exploiting them,\u201d he added. <\/p>\n In addition to these technical advancements, Greisman believes increased regulatory scrutiny and user education will play vital roles in reducing future scams, exploits and hacks. <\/p>\n \u201cRegulatory measures help establish standards and guidelines for security practices while educating users about potential risks and best security practices helps enhance their ability to protect themselves,\u201d he said.\u00a0<\/p>\n Speaking to Cointelegraph, crypto exchange Kraken\u2019s chief security officer Nick Percoco said that, in his experience, criminals target anything of value to turn a quick profit, and crypto is just one of many assets of value in the world today. <\/p>\n He believes crypto receives undue attention for its losses, while the fiat currency system still sets records yearly for losses through malicious actions. <\/p>\n \u201cCrypto is often referenced in the news for theft and fraud, but in reality, the total losses are a fraction of the total payment card, ACH [automated clearing house] and wire fraud worldwide,\u201d he said. <\/p>\n According to the Global Anti Scam Alliance \u2014 a nonprofit organization dedicated to protecting consumers from financial crime and scams \u2014 fiat money lost to scams has increased<\/a>, with $47.8 billion lost in 2020 and $55.3 billion in 2021.<\/p>\n The United Nations estimates<\/a> that the amount of money illegally laundered globally in one year is 2% to 5% of the global gross domestic product, equaling around $800 billion to $2 trillion.<\/p>\n Percoco says that, unlike other methods of theft and fraud, crypto transactions occur on-chain and in plain view of everyone in the world, which he believes is a major strength for the industry because the stolen funds can then be tracked.\u00a0<\/p>\n It might also factor in the increased scrutiny and attention that losses in the crypto space receive. <\/p>\n \u201cWhen a large compromise does happen, the entire world is able to help track the funds to see exactly where they flow to,\u201d Percoco said. <\/p>\n \u201cThis isn\u2019t possible in the traditional financial systems where the movement of funds happens behind closed doors and over private networks,\u201d he added. <\/p>\n BNB Chain has identified the Allbridge attacker following on-chain analysis. We are actively supporting the Allbridge team on the fund recovery. The Allbridge team has offered the hacker a bounty.<\/p>\n We’d like to recognize the effort of AvengerDAO in this recovery effort.<\/p>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-06\/e035970f-f29e-447e-95db-594b64766f02.png\" "\\"\\"")
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Artificial intelligence could be next<\/h2>\n
Growing pains are unavoidable for crypto as it grows<\/h2>\n
Crypto losses receive more attention than fiat currencies<\/h2>\n
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