First Mover Asia: Crypto’s “learn-on-the-fly” ethics exposed as bridge hack damage reaches $ 2 billion

Bitcoin and Ether continued to slide, but barely. Meanwhile, a corporate partnership announcement was enough to skyrocket Coinbase’s stock (and the short sellers who took cover).

Good morning. Here’s what happens:

Price: Neither bitcoin nor ether got a boost from news of a deeper push to cryptocurrencies from traditional fund manager giant BlackRock. But Coinbase’s shares certainly got a boost, climbing in what felt like a brief squeeze.

Insights: Cross-chain bridge vulnerabilities have emerged as a major security risk as attackers have already raised nearly $ 2 billion in illicit gains from 13 different hacks this year, reports Shaurya Malwa.

  • Bitcoin (BTC): $ 22,523 -3.4%
  • Ether (ETH): $ 1,594 -3.2%
  • S&P 500 Daily Close: 4,151.94 -0.1%
  • Gold: $ 1,808 per troy ounce + 2.8%
  • Daily close of 10-year Treasury yield: 2.68% -0.07

Bitcoin, Ether and Gold prices are taken around 4:00 PM PT. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information on the CoinDesk indices is available at coindesk.com/indices.

Bitcoin continues to fall, Coinbase shares rise

By Helene Braun

Bitcoin (BTC) fell for the seventh consecutive day, losing as much as 1.6% on Thursday after breaking the $ 22,500 mark. Ether (ETH) fell 1.5%.

The slide also came as positive news emerged from Coinbase today regarding a new partnership with BlackRock to allow more institutional investors to allocate money into cryptocurrencies.

Some prominent Twitterers have suggested that the announcement should have a greater market effect; Barry Silbert of Digital Currency Group (which owns CoinDesk) wrote that he was “surprised that the price of BTC hasn’t moved on this news. It’s a turning point. ”

The price movement may be more of a reflection of the hawkish remarks made today by Cleveland Federal Reserve Chairman Loretta Mester. You said the Federal Reserve will continue to raise interest rates, most likely at more than 4%.

He also said the Fed could suspend rate hikes in the second half of 2023, refuting the idea that central banks could potentially start cutting rates early next year, which some investors already seem to be counting on.

The price of bitcoin rose last week as Fed Chairman Jerome Powell’s press conference was greeted by investors as rather dovish.

Short press of Coinbase

The big winner in crypto shares on Thursday was Coinbase (COIN), whose shares jumped 31% to a price of $ 106 after the US exchange announced its partnership with BlackRock.

The shares quickly fell closer to the $ 90 mark in afternoon trading, ending the day up 11%.

“A classic short technical squeeze,” analysts at S3 Partners, which tracks equity loan data, wrote in a report.

The rest of the cryptocurrency market seemed unaffected by the news, with the average return on investment (ROI) negative at -2.16%.

Among cryptocurrencies, Flow (FLOW), a blockchain created by Dapper Labs, was a big winner, up more than 37% in the past 24 hours after social media giant Meta, owner of Facebook, announced that the its Instagram platform would add support for NFT built on the Flow blockchain.

Markets generally appear to have recovered from US House Speaker Nancy Pelosi (D-California) visit to Taiwan on Tuesday, which prompted many investors to steer clear of risky assets amid potential US-China tensions.

Ether (ETH) ended the day slightly lower, trading at $ 1,644.62 at press time.

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Knowledge

Crypto’s ‘Learn On The Fly’ Ethics Exposed As 2022 Bridge Hacks Hit $ 2 Billion

By Shaurya Malwa

Cross-chain bridge vulnerabilities have emerged as a major security risk, as attackers have already raised nearly $ 2 billion in illicit gains from 13 different hacks this year.

These attacks accounted for 69% of all funds stolen in 2022, security firm Chainalysis estimated in a report this week. The unnerving trend has highlighted the lax security measures developers have put in place to protect users of their cryptocurrency projects.

Bridges are a prime target for North Korean-related hackers, who have stolen about $ 1 billion worth of various cryptocurrencies entirely from bridge and other DeFi protocols this year, according to Chainalysis.

Bridges are protocols that allow the exchange of information, cryptocurrencies or resources such as non-fungible tokens (NFTs) to move from one blockchain network to another. The cryptocurrencies used to make bridges work are stored in on-chain wallets, which makes them vulnerable to attack.

A North Korean hacker group is believed to be behind the $ 600 million attack on Axie Infinity’s Ronin Bridge. Another hacker-related case in the country was the $ 100 million Harmony’s Horizon Bridge exploit.

“Chain bridges have been targeted by nation-state threat actors in the past with meticulous planning and precise execution,” said Andrew Morfill, chief information security officer at cryptocurrency custodian Komainu at CoinDesk. “The first indications with Nomad were that he was being driven by opportunistic ‘looters’, but while the pilots are different the results are inevitably the same. Loss of assets.

“Disruptive technologies are volatile”

Why are such massive attacks on the agenda? Security experts say cryptocurrency remains a learning playground, indicating that products are built quickly without proper testing.

“Disruptive technologies are volatile and, as a result, carry significant risks and great rewards,” shares Daniel Keller, co-founder of the Flux cross-chain ecosystem. “Most developers in the blockchain space are learning on the fly, as they come from conventional technology stacks and improve their skills. “

Education on cryptocurrency development “will become a driving force” and ultimately lead to better scheduled services, according to Keller.

“As adoption grows, you will see a strong push from leaders, driven by institutional demands on their customer base,” he said. “As the industry matures, we will continue to see hacks. ”

Chainalysis said in his report that “just a few years ago, centralized exchanges were by far the most frequent targets of hacks in the industry.”

“Today, successful centralized exchange hacks are rare. This is because these organizations have prioritized their security and because hackers are always looking for the newest and most vulnerable services to attack, “the company said.

Improved security practices for implementing smart contracts would eventually “serve as models from which developers could build,” wrote Chainalysis.

The high price of expensive deadlines could provide an additional incentive to continue.

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