Cryptocurrency News: Can Cryptocurrency Blockchain Technology Stand the Test of Time?

Cryptocurrency News: Can Cryptocurrency Blockchain Technology Stand the Test of Time?

Two days ago, Binance, the world’s largest cryptocurrency exchange, admitted it had suffered a double whammy when hackers stole $100 million worth of cryptocurrency from a BNB blockchain bridge (formerly known as Binance Smart Chain).

A blockchain bridge is a tool used to transfer cryptocurrencies between different applications running on the blockchain.

However, Binance’s misery did not end there. Subsequently, BNB Chain said in a blog post that a total of two million BNB tokens — worth about $570 million — had also been withdrawn by the hacker.

This year has been a particularly challenging year for cryptocurrency exchanges around the world, with many countries tightening their laws on cryptocurrency trading, some like India imposing high taxes on winnings, and some calling for a total ban on cryptocurrency.

There is no doubt that the premise of blockchain as a technology is impressive, as it provides an opportunity to get rid of intermediaries such as banks. But decentralization brings with it its own set of problems, such as high energy costs, low speeds, and of course, hacks.

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Blockchain projects are very secure, but several hacks this year have exposed holes in the armor. More than $1.6 billion worth of cryptocurrency was stolen from users in 2022, according to reports
Chainalysis blockchain data platform.

Of the seven largest cryptocurrency hacks to date, six occurred in the past two years, with Ronin Network ($625 million, 2022), Poly Network ($611 million, 2021), and Binance ($570 million, 2022) on the Header charts.

Are Encrypted Blockchains Impervious?

It is important to understand the distinction between cryptocurrency and blockchain. The former is a decentralized use case of the latter. In simple terms, cryptography is a small but important part of what makes blockchains possible.

Cryptocurrencies, which are decentralized digital assets, use cryptography to ensure secure transactions between different parties. Such transactions are recorded and stored in a digital ledger called a blockchain.

While the blockchain itself is almost immune to hacks, vulnerabilities outside of these digital ledgers present opportunities for thieves, particularly when it comes to cryptocurrency transactions and wallets.

It’s not impossible – as we’ve seen in many hacks over the years – for hackers to gain access to the wallets of cryptocurrency owners and use their private key – a type of passcode needed to sign transactions and prove ownership of a blockchain address – to steal the crypto.

There is also one way a blockchain can be hacked – the so-called 51% attack. Hackers can theoretically take over the blockchain by controlling the majority of the blockchain’s computational power, which is called a hashrate. If they own more than 50% of the hash, they can enter a modified blockchain.

This allows them to make changes to transactions that the blockchain did not confirm before taking over. While this type of attack is possible in theory, it is very difficult to implement in practice.

But as many central banks around the world are getting tougher when it comes to cryptocurrencies, massive hacks like the one that happened last week don’t bode well for the crypto community as they deter investors.

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