When speaking ill of crypto, there is almost a set narrative of what people may say. Throughout my articles, I’ve sought to disprove most of them, as they’re often just invalid arguments.
1: Crypto is used by criminals
Yes, and so is the U.S. Dollar. Or the Euro. Or whatever currency a criminal may prefer. Cryptocurrencies aren’t any easier for a criminal to use than fiat currencies, which still remain the currency of choice for most criminals.
2: Crypto consumes too much energy
It’s true that crypto does consume a lot of energy, specifically proof-of-work blockchains like Bitcoin, as I’ve covered in the past. However, when compared to the energy inefficiency of the existing banking and monetary system, even Bitcoin and its power-hungry network is more optimized, not to mention the hugely more efficient technology of proof-of-stake blockchains, like Ethereum.
3: There’s been a history of crypto theft
This is one point that I cannot disprove, because it’s true. From the fabled shutdown of the centralized Mt. Gox exchange in 2014 due to embezzlement from management to the most recent, second-biggest crypto hack that saw around $600 million being stolen from the Ethereum blockchain-based Ronin Network, crypto theft has long existed, and perpetrators have long been finding new ways to get around continued advancements in blockchain security.
These hackers target points of centralisation in networks, which explains why there hasn’t been a hack of the Ethereum main network in recent history, due to the decentralized nature of the entire network. Instead, hackers can look for points of weakness where smaller projects built on the main network made mistakes in their individual security, which seems to happen pretty often.
This is extremely concerning.
However, it does give us a glimpse of which projects are here to stay.
While the Ronin Network hack was the second biggest crypto hack, the actual biggest provides a good example of why getting hacked shows who’s here for the long run.
The Poly Network is an interoperability platform for heterogeneous blockchains, which basically means that it helps move crypto between blockchains, like moving Bitcoin-based cryptos into Ethereum-based cryptos and vice versa.
The network has moved $10 billion in assets since launch, which shows the scale at which the network operates.
However, in August of 2021, the network saw around $610 million in assets transferred to hacker(s)’ addresses.
Where we can see the potential longevity of this project is the management team’s response to the situation.
Poly’s team immediately sent out an announcement to exchanges and miners to do what they could to stop the movement of the stolen crypto. The Tether network froze $33 million in USDT (an asset that is pegged 1-1 to the U.S. Dollar, managed by Tether).
The blockchain records made it easy to track exactly where the crypto had landed with identity clues on the blockchain, finding the perpetrators’ wallets within the day.
Whether more was going on in the background to stop the flow of the stolen assets remains unclear to the public, as with mounting pressure, the hackers published they intended to return all of the crypto to Poly.
There have been numerous projects that have failed to take these sorts of measures, instead opting to try to address the problem silently. Some have failed, and some have succeeded.
Blockchains in of themselves stand for transparency. When a project like Poly, in the face of crisis, immediately sends out a message to the public that their assets are in peril, and sets out their measures expeditiously to try to resolve the issue, these projects create a paradoxical type of public confidence in the system.
Personally, my trust in the Poly Network has increased.
While the theft of digital assets remains a huge concern to public trust overall, an individual project’s management’s response, whether fast, slow, targeted or vague, gives us a glimpse as to how they may continue to operate into the future.
In this stage of crypto’s adolescence, these crises present a valuable test as to whether a project has the potential to thrive into the future.
