Cryptocurrency hacks are a threat to both the blockchain sector
Following the news that Indexed Finance is still trying to recover the $US16 million it lost as part of an elaborate flash loan hack back in October 2021.
Chris Dinga, Payments Analyst at GlobalData, a leading data and analytics company, offers his view:
“The growing popularity of the crypto sector has made it a prime target for hackers that are aware of the limited fraud prevention measures on those platforms. Indexed Finance wasn’t alone, according to HedgewithCrypto and CryptoSec, crypto hackers managed to steal more than $US2 billion* from cryptocurrency exchanges and DeFi platforms** in 2021, and just over $US1.5 billion in the first half of 2022 alone.
“Cryptocurrency hacks are a threat to both the blockchain sector and the rest of the economy. For now, those hacks are mainly affecting crypto traders. However, with a growing number of companies such as Visa and Mastercard integrating cryptocurrencies in their platform, there is a risk that these hacks will start to affect the rest of the economy.
“Although they are built for different purposes, both cryptocurrencies and central bank digital currencies (CBDC) are built on blockchain technology. Countries that are actively working on introducing their own CBDCs should make sure that they put fraud prevention solutions in place. CBDCs could eventually replace fiat currency, however, manipulations and hacks will happen unless infrastructure flaws are ironed out.
“Blockchain technology can be applied to various sectors from finance to big pharma. To see a large adoption of this technology, security issues and design flaws need to be resolved.”