Cryptocurrency continues to be a popular investment choice. That is, until recently. Cryptocurrency Platform Poly Network recently experienced a hack this week, losing about $600 million in digital tokens. It’s one of the sector’s biggest attacks by hackers, with the finance platform listing digital wallets where money from accounts have been transferred. The company urged users to “blacklist” their tokens from these wallet addresses, stating on Twitter that legal action is underway.
The theft continues
The hackers returned some of the tokens Wednesday morning, with around $2 million in stolen tokens given back. Still, it was the largest hack in the cryptocurrency market. The last largest was of $530 million from Coincheck in 2018. Before that, hackers stole half-a-billion dollars of Bitcoin in 2014 from the Mt. Gox exchange, causing the exchange to collapse.
Poly Network stated management believes the hacker or hackers found a “vulnerability between contracts cells.” All in all, they took about $267 million in Ether currency, $252 million in Binance coins, and $85 million in USDC.
What investors should know
After a year of strong cryptocurrency growth, the fact that hackers could come in and steal more than half-a-billion dollars will set the market back a long way. It’s going to take a lot for consumers to regain confidence in this method of currency again. This will create a downfall in cryptocurrency that could indeed last years.
Even as Poly Network retrieved some of the tokens and a global investigation, it’s pretty much up to the hackers to return the tokens. This, again, does not bode well for investors to believe their cash is safe in cryptocurrency. The entire system, in fact, remains mostly unregulated. This allows for weaknesses in the code, thus the vulnerability to hacks and indeed heists such as the one seen Wednesday.
No initial downfall
Ethereum and Bitcoin continued to climb upwards this week, after dropping down in May. In fact, both are closing in on all-time highs. And that could be because there’s already movement to start protecting cryptocurrency users.
The European Union set forth a proposal to address the improved detection of both money laundering and financing of terrorism. This would include any digital currency provider to apply for a licence. Any anonymous digital currency accounts would indeed be banned.
On top of that, the United States Infrastructure Bill proposal would require those in the digital currency industry to both collect information and report tax obligations to the government. So, it’s clear that the world over is prepared for a future with cryptocurrency in it.
Bottom line
If you’re a long-term investor, then investing in cryptocurrency can still be a good choice. Governments are already looking into ways to digitize currency. These recent proposals prove the future will be filled with it. However, in the short term, it could be that every few years we continue to experience a hack that causes a major setback. But it will also force miners to improve code to allow fewer vulnerabilities.
For now, investing in a strong cryptocurrency exchange-traded fund like Galaxy Digital Holdings could be a great choice, offering an array of cryptocurrency rather than just one. I would just be patient when investing in cryptocurrency, because it could be a while until it’s as safe as the bills in your wallet.
