Blockchain’s Huge Blind Spots

All traditional assets, from coins to works of art, are reimagined as rare and safe assets on public blockchains. (Photo: 123RF)

LES KEYS DE LA CRYPTO is a section that patiently decodes the world of cryptocurrency and its stock market, industrial and media turmoil. François Remy’s mission is to identify promising entrepreneurs, decode technical progress and anticipate the industrial and societal impacts of this digital currency.

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(Illustration: Camille Charbonneau)

This text has been modified since it was posted online.

So-called blockchain technologies are redefining all traditional assets into supposedly secure and traceable digital forms. Yet mistrust still reigns and some very specific actors bear (at least in part) the responsibility.

Public Blockchains Like Bitcoin Disrupt Centralized “Big Tech,” reminds us in an interesting infographic from MSCI. This financial services company, which publishes the stock indexes of the same name, explains that consumers are in fact looking for technologies that do not compromise their privacy and cybersecurity.

Consumers now place less trust in their financial data, and the blockchain offers an option of minimized trust, because, pin MSCI, “the blockchain goes far beyond bitcoin, it solves the problems of transparency, verifiability of financial systems and ownership of digital assets. All traditional assets, from coins to works of art, are reimagined as rare and safe assets on public blockchains.

Shoemaker Syndrome 3.0

The behavior of users and, a fortiori given their interdependence, of investors with regard to emerging decentralized technologies remains largely influenced by certain actors who would prove to be counterproductive: specialists in cybersecurity for the Web3.

Let’s open a brief parenthesis, Web3 refers to the concept of a new generation of digital services powered by blockchains.

It would therefore seem that the guardians of this decentralized Internet fail to demonstrate their expertise and efficiency. In any case, this is the admission of one of them, Dyma Budorin, CEO of Hacken. The Ukrainian entrepreneur at the head of a smart contract auditing company (smart contracts) deplores a lack of accountability and transparency in computer code audits.

The code is law

The principle of free access code (open source) dear to the world of crypto, which partly explains the explosive development of this industry for several years, now seems to go against its own ecosystem.

“Projects are cloned and deployed so easily. Newly created projects often attempt to adapt existing code by introducing new ideas. They do this by modifying system mechanics that are not intended for such tasks. As a result, the pieces of code become incompatible and cause failure,” do we recognize at Token Guard.

Smart contract auditors take no responsibility if a token they audited is hacked due to a bug in the code. However, most of the biggest hacking events in 2022 happened on projects that had indeed been audited.

A situation that makes Hacken’s CEO uncomfortable as it jeopardizes the growth trajectory of the “Web3-security” industry which already lags far behind non-crypto equivalents.

“Crypto auditors have a big responsibility. They lack testing, accountability and transparency in cryptocurrency ratings. Right now, the best practice in the market is to get a token audit and that’s it,” Dyma Budorin told CoinTelegraph.

More demand for more reliable data

Of course, some Web3 listeners may dive into the code of a new cryptocurrency looking for threats of varying severity. But the lack of industry standardization of these audits has the eventual consequence that other factors such as the viability of a business model, the experience of the team, are left out.

Even in the rare cases where a project would want a more robust audit, they wouldn’t be able to get it from Web3 cybersecurity companies, says Hacken’s CEO because “no company offers recurring audits that are operated every months and go much deeper into the project.”

Thus, over the few months of 2022, emblematic projects such as the network wormhole Where Ronin lost US$920 million due to breaches in their computer code. Code that could have, should have even benefited from a more thorough audit. In addition to the apparent bugs, Dyma Budorin laments “a huge amount of blind spots” in cybersecurity because “there is no way to know who is responsible for the keys, who mints new digital currencies.”

More transparency, more reliable information from responsible sources, this is a wish that will also require a change in behavior on the part of retail crypto investors, who tend to put money in trendy projects.

Fortunately, there are solutions and even accessible techniques to avoid giving in to the temptation of a new crypto that would take 1000%.



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Blockchain’s Huge Blind Spots


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