The Daily Update: Cryptocurrency Theft

In what is most likely one of the biggest cryptocurrency thefts ever, over $600 million has been stolen from Ethereum and other such cryptocurrencies after hackers exploited a vulnerability in the security of blockchain-based platform PolyNetwork. PolyNetwork is a platform which allows users to exchange crypto tokens (coins?) and has confirmed that thousands of investors have been affected by this latest theft. The company revealed the attack on social media (naturally) and asked for their ‘hacked assets’ to be returned, whilst threatening to take legal action.

Here at SSC we are no experts in the nuances of cryptocurrencies or blockchain-based platforms. So, after extensive research (well, 20 minutes, after which I got bored) here’s what I have learned. A blockchain is a ledger of activities upon which several cryptocurrencies are based. Each digital currency has its own blockchain and they’re different from each other. Companies like PolyNetwork claim to be able to make these various blockchains work with each other. So, in essence make them fungible we guess.

PolyNetwork said tens of thousands of people will be affected by the hack, although approximately $33 million of the stablecoin Tether, which was part of the theft, has been frozen by its issuer, making it unavailable to the attacker.

This year, losses from hacks, fraud and theft in ‘decentralized finance’ or DeFi as its known, a booming segment in the cryptocurrency sector, hit an all-time high in the first seven months of 2021, according to a report from crypto intelligence company CipherTrace. Not that any of the events over the last 24 hours have made a difference to the price of Bitcoin or alike. At time of writing, it was trading around $46.5k, up from $30k on the 20th of last month.

Personally, I can’t get my head around cryptocurrencies, and as such would not touch them with a barge pole. To me they are the same as a prepaid credit card, with the added risk of the value fluctuating once you have purchased, but without the upside protection that a credit card gives you. However, millions do get their head around it and that’s what makes a market. Each to their own.