The crypto industry needs to overcome its issues with bridge security, Kimberly Grauer, director of research at software company Chainalysis, said Monday on CoinDesk TV's “First Mover” program.
“Bridge security is an unresolved technical challenge in the industry,” Grauer said. In the crypto world, bridges is software that allows users to transfer assets between different blockchains. This type of software has been one of the most targeted parts of decentralized-finance (DeFi) platforms, Grauer added.
“The perception around that is not that there’s a honey pot of money, but a lot of funds stored in one place that are backing funds on another blockchain,” she said.
Non-centralized storage of money combined with bridge accessibility has made the software “a target,” she added.
According to Chainalysis, October has become the worst month for crypto hacks, with upward of $718 million being lost due to security-related crimes, and there's still two weeks left in the month.
That poses a “reputational risk” for investors and users, Grauer said, citing the most recent hack – which saw more than $100 million fizzle out of Mango, a DeFi platform that's based on the Solana blockchain (before eventually being returned) – as an example that could decrease consumer confidence in crypto.
“In order for people to comfortably invest in DeFi protocols,” industry figures must figure out better ways to build trust in blockchain technology by working together and making cybersecurity a priority, she said.
“It’s not just one protocol that was hacked that has impact, but it’s also the fact that you’re less eager to invest in an existing new protocol because the hacking concept is looming in your mind,” Grauer said.
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