Why Hacks Might Be Good for the Crypto Industry

It is a testament to the popularity of the cryptocurrency space and to the interest levels of many investors that the digital token world has not been completely upended by hacks and thefts. Even now, years after the digital currency space first emerged and gained popularity around the world, experts estimate that millions of dollars in coins and tokens are stolen every day.

All too often, headlines turn toward the latest theft or large-scale hack of a cryptocurrency exchange or a digital wallet somewhere around the world. Still, investors are willing to continue to invest money in digital currencies as a group, regardless of the uncertainty such security threats pose. While markets may witness downturns after these events, they tend to be short-lived. Thus, in retrospect, hacks and other attacks on the digital currency space may actually be beneficial.

The Benefits of Crypto Industry Hacks

Blockchains and the cryptocurrencies linked to them are lucrative targets for hackers and thieves because they carry an opportunity to steal valuable assets while remaining somewhat anonymous. While some investors have tragically lost life savings in hacks and thefts, there are some benefits to these acts:

• After an attack, a blockchain’s developers and communities are able to identify the weaknesses that were exploited and fix them
• Results published from an investigation after an attack lead to increased awareness and fixes across the industry
• Authorities can track the blockchain addresses of the hackers and continue gaining intelligence on who might be executing the attack and where it originated.
• Subsequent investigations have led to the recovery of millions of dollars worth of cryptocurrency, which means the instigators were discovered and arrested or otherwise encouraged (identity discovered and pressured by authorities) to return the assets.

Crypto Hacks Force Development

When a high-profile hack takes place, many companies and developers in the cryptocurrency industry (either directly involved with the event or not) retreat to the drawing board to examine if their blockchains or networks might be susceptible to similar attacks.

While this process is unlikely to stop all hacking attempts, it will nonetheless help to increase the security of those individual coins and companies, thereby helping to enhance the security of the entire digital currency space. Without security, it’s unlikely that digital currencies will ever enjoy the stability necessary for mainstream adoption. In the meantime, as hacks continue to take place, emerging leaders in the crypto world will strive to offer the safest, most secure product possible.

Crypto Industry Hacks and Evolution

Hacking will always continue, regardless of the technology in question, so attacks of this type actually inspire evolutionary development in the digital currency space. In a market where survival of the fittest is prevalent, those coins, exchanges, and companies that are ill-equipped to deal with these threats will eventually either lose customers or be pushed out of the space entirely.

This will leave only the most secure coins, tokens, and related companies. Only the best blockchains and apps will ultimately survive, and they will also be obligated to continue to develop as hacking grows more sophisticated.

The Bottom Line

While theft is a shameful (and illegal) way to acquire assets in every culture around the world, it remains an activity that will likely never disappear, especially concerning valuable assets like cryptocurrency.

The only way to defeat it in cryptocurrency is to continue identifying weaknesses in the programming and protocols used to secure blockchains and networks and implementing controls. Unfortunately, one of the main ways of identifying these weaknesses is when they are exploited. However, exploits lead to fixes and more thought behind security, which in time will lead to better security—at least until the next weakness is exploited.