The Digital Problem

As of 2022, the usage of digital currency has experienced exponential growth, evolving from a niche domain of Internet users to a global phenomenon. Governments, businesses, municipalities, states, and even national entities are all making strides towards a digital future, incorporating digital currency into various aspects of their operations, such as financial systems, official records, public transportation, infrastructure, and data storage.

Despite this rapid progress, there remains a crucial hurdle to overcome before digital currency can become a regular means of conducting transactions for mainstream businesses and governments. The exact nature of this obstacle demands further scrutiny. It could involve regulatory complexities, technological challenges, or the need for broader public acceptance.

To ensure a successful digital transformation, organizations must address this issue head-on. Embracing the potential of digital currency requires thoughtful planning, collaboration, and a willingness to adapt existing systems. By leveraging data, statistics, and real-world examples, businesses and governments can pave the way for a future where digital currency plays a central role in the global economy.

"Digital currencies lack the necessary defense mechanisms to protect user information against cyberattacks. While technologies like blockchain and coin mining hold great promise, they also exhibit vulnerabilities in terms of security, efficiency, and cost. Recent statistics reveal that the bitcoin blockchain can handle a mere seven transactions per second, with the mining process costing an exorbitant $4,600 to mine just one bitcoin in the U.S. Moreover, mining consumes an alarming amount of energy, equivalent to powering 26.41 U.S. households, resulting in a staggering carbon footprint of 382.9kg of CO2 per transaction. This energy-intensive process raises concerns about its environmental impact.

The concept of decentralized mining aims to distribute power and trust, but the lucrative nature of mining has made it a prime target for theft. The system's core purpose is at risk when cybercriminals can compromise the process, eroding trust within the community. The rise in theft of digital currency exchanges has led to a threefold increase in associated money laundering, according to a report from the reputable U.S.-based cybersecurity firm CipherTrace.

Addressing these security and efficiency challenges is crucial to creating a robust and sustainable digital currency ecosystem.

DEFICIENCIES OF DIGITAL CURRENCIES

The ultimate goal of digital currencies is to replace an antiquated and inefficient monetary and financial system. However, no currency or back-end technology exists that can prevent theft or securely facilitate transactions with the speed and volume required for widespread adoption. There are now well over 300 million crypt users worldwide.

This makes it the eighth largest economy in the world, if you're calculating based on gross domestic product. It's difficult to calculate how a digital currency will stand up to global economics, because it is specifically designed not to be a traditional country's currency. Approximately $112 billion is traded in digital currencies per day. Of course, the number one deterrent to digital currency acceptance is theft and coin security. As much as digital currencies have grown in popularity, they have equally grown as targets for crime. Incidents of digital currency hacks and theft are reported regularly..

The main obstacle hindering the widespread acceptance of digital currencies is the alarming prevalence of theft and coin security breaches. Despite their growing popularity, digital currencies have become attractive targets for criminal activities, with theft reaching staggering values, around $400 million per month.

The value lost to security threats in the digital currency realm grew exponentially between 2020 and 2021, with a single heist in August 2021 amounting to a whopping $610 million stolen. This incident, considered one of the largest digital currency heists ever recorded, targeted the Ethereum-based DeFi application Poly Network and exploited a vulnerability in its code. After the platform pleaded with the hacker, the anonymous individual returned roughly half of the stolen funds, claiming the hack was done "for fun."

Although these attacks have brought visibility to the issue, the lack of security remains a significant concern. Prominent figures in the digital community, such as Phillip Nunn and Ethereum founder Vitalik Buterin, have emphasized the need for security improvements, particularly in digital wallets.

The prevalence of systemic security issues is deterring traditional investors and the general public from fully embracing the digital currency market. As a digital community, it is essential to foster growth and support emerging technologies by establishing a secure foundation. Only with robust security measures in place can we propel this industry forward and instill confidence in potential users and investors.

Beyond enterprise-level crimes, there has been a notable rise in individual Bitcoin thefts, exceeding $150 million. The landscape of digital crime has shifted, moving away from illicit exchanges on underground markets to target the theft of highly valuable financial assets. This trend is expected to continue as the number of digital currencies in circulation surpasses 1,500.

Attack vectors for these thefts come in various forms, including exploitation, phishing, fraud, interception, and hacks. The current system faces numerous vulnerabilities that demand thorough review and prompt addressing. As the digital currency market evolves, the implementation of robust security measures is imperative to safeguard the industry's integrity and protect users from potential threats.

Software Vulnerability: In 2016, a vulnerability in the “smart contracts” software code allowed a hacker to steal $50million of Ethereum digital currency.
Stolen Login Credentials: In the Mt. Gox compromise, $460 million was stolen when 850,000 bitcoins were siphoned from the exchange. Login credentials were stolen from an auditor’s computer and used to log into the exchange and steal the coins.
Phishing: Ultimately, $79.6 million was stolen from a blockchain digital wallet. Hackers post fraudulent advertisements on Google to trick users into logging into fictitious sites. Access a wide range of local public and private e-services
Software Vulnerability: The Coincheck hack was the biggest heist in history with $530 million of NEM digital coins stolen.[2] While the full details have never been released, there have been some mentions of a hot wallet compromise, which can likely be attributed to a software vulnerability that was hacked to gain access to currency stored online that was web accessible. Managing One's Kingdom of Kush online company from anywhere in the world
Cybercriminal Miners: In February 2018, a Monero miner hack made the headlines, “Hacker Group Makes $3Million by Installing Monero Miners on Jenkins Servers.” The mining process was legitimate, but the profits were illegal. The miners were cybercriminals who hacked 500,000 computers around the world and used them to execute the work. They infected computers with malware, installed the Monero mining software on them, and with enough machines and computing power, they netted millions of dollars in illegal mining profits.

THE COST OF CRYTPOCURRENCY THEFT

Poly Network – $610 million stolen:

In August 2021, a hacker attacked Poly Network by exploiting avulnerability in its system and managed to steal funds worth over $600 million.

Coincheck – $532 million stolen:

January 2018, Japan-based Coincheck had its NEM (XEM) tokens stolen to the tune of more than $530 million. Hackers exploited the fact that the currency was being kept in a“ wallet, meaning it was connected to the server and was effectively “online" (a cold wallet sees funds stored offline).

MT Gox – $470 million stolen:

This was the first large-scale hack on an exchange and is still the biggest theft of Bitcoins from an exchange. The platform had been leaking funds since 2011, up until it was discovered in February 2014. Over a period of a few years, hackers stole 100,000 bitcoins from the exchange and 750,000 bitcoins from the exchange’s customers.

Wormhole – $326 million stolen:

In the first major digital heist of 2022, Wormhole’s digital platform was exploited to the tune of $326 million. The platform acts as a communication bridge between Solana (an Ethereum rival that has recently gained traction) and other decentralized finance networks.

KuCoin – $281 million stolen:

In September 2020, KuCoin confirmed that hackers had managed to obtain private keys to their hot wallets before withdrawing large amounts of Ethereum (ETH) and bitcoin (BTC), as well as Bitcoin SV (BSV), Litecoin (LTC), XRP (XRP), Stellar Lumens (XLM), Tron (TRX), and Tether (USDT).

PancakeBunny – $200 million stolen:

In this flash loan attack in May 2021 where hackers were able to drain $200 million from the platform. To carry out the attack, the hacker loaned a large amount of Binance Coin (BNB) before manipulating its price and dumping it on PancakeBunny’s BUNNY/BNB market. This enabled the hacker to get a huge amount of BUNNY through a flash loan, dump all of the bunny in the market so the price dropped, before paying back the BNB through pancakeswap.

Bitmart – $196 million stolen:

Almost $200 million was stolen in a compromise of Bitmart’s hot wallet in December 2021. Initially, $100 million was identified as having been stolen over the Ethereum blockchain, but a further investigation revealed another $96 million had been stolen over the Binance Smart Chain blockchains.

Bitgrail – $150 million stolen:

Bitgrail was a small Italian exchange trading in lesser-known digitals, such as Nano (XRB). In February 2018, just as the price of XRB skyrocketed from a few cents to $33, the exchange was hacked. Nano wallets had been targeted with at least 17 million coins stolen (the equivalent of around $150 million). Many users started to comment that they had noticed issues with the exchange before the attack (significantly lower withdrawal limits and transaction problems). Investigations also revealed that the coins had been stolen from cold wallets, not hot wallets, suggesting an inside job

Vulcan Forged – $135 million stolen:

Hackers made off with $135 million from Vulcan Forged–a blockchain gaming company–in December 2021. They accessed 96 different wallets by stealing private keys, before draining 4.5 million PYR tokens from them.

Cream Finance – $130 million stolen:

Not only did hackers make off with $130 million in an October 2021 attack, but this was the third attack Cream Finance had suffered that year. In February, hackers also stole$37 million and in August another $29 million. The latest attack saw hackers exploiting what was thought to be a vulnerability in the DeFi platform’s flash loan system.

BadgerDAO – $120.3 million stolen:

In December 2021, a hacker managed to drain funds from across various digital currency wallets on the DeFi platform, BadgerDAO. The platform confirmed that hackers had used a “maliciously injected snippet” via Cloudfare which allowed them to drain $130 million in funds, around$9 million of which was recovered as it hadn’t been withdrawn.

CoinBene – $105 million stolen:

Initially, after huge outgoing transactions from CoinBene’s hot wallet to an unknown wallet in March 2019, the platform said it was undergoing maintenance. However, with every one of the platform’s ERC-20 tokens reportedly moving into an unknown wallet (which didn’t exist until the day of the transfer), rumors quickly circulated that this was an attack. Data scientists also found that the tokens were promptly moved to Etherdelta where they were sold for Ethereum (ETH). This amounted to $105 million at the time.

Liquid – $97 million stolen:

In August 2021, Japanese digital currency exchange, Liquid, detected that unauthorized persons had accessed its wallets before moving assets worth more than $97 million out of them

EasyFi – $81 million stolen:

By stealing the private keys to EasyFi’s MetaMask admin account, hackers were able to extract $6 million in USD, DAI, and USDT, plus 2.98 million EASY tokens, all of which amounted to around $81 million.

ENERGY CONSUMPTION

The total global revenue from mining digital is over $20 billion annually. Therefore, there is no question as to the requirement and desire for digital mining.

Mining digital is a time intensive process. Different digital currencies have different methods of mining, usually involving solving a complex algorithm with a computer.

Those who mine digital gain income from owning new digital currency rather than investing in the existing market. The process of mining digital currency uses more electricity than the entire country of Argentina, leading to serious environmental concerns.

Energy consumption is a big issue for Bitcoin and other digital currencies that use mining systems.

Bitcoin mining alone uses up enough electricity that more than 10 million homes could be totally powered for the year.

The mining is done by computers that work on complicated algorithms. Every time a new Bitcoin is "mined," the algorithm becomes more complicated.

If digital currency was considered a country, its energy consumption would be in the top 30 in the world.

That's amazing because it means that mining uses as much energy as things like basic infrastructure, industrial needs, and commercial uses.

The cost of electricity to mine Bitcoin every year comes to almost $4.5 billion worldwide.

Bitcoin mining might be great for electric companies, but it raises concerns about how the infrastructure can handle the power consumption.

A large amount of revenue generated by digital mining is spent on electricity. In total, digital miners spend around 23% of their total mining income to maintain electricity for their rig. That's the biggest cost of a mining setup for most people.

CPUs were the original units used to mine Bitcoin. But GPUs are faster. You need to have the fastest rig if you want to mine Bitcoin, so miners have switched over to these. Unfortunately, they use significantly more power.

Bitcoin mining has the potential to increase the global temperature more than 2°C.

TOGETHER WE PROSPER

Now more then ever we have to come
together to ensure our future and to protect our beautiful, amazing and diverse planet Earth.

FOR MORE INFORMANTION

Contact Form

News Letter Subscription

Purchase Qualification Request