The emergence of crypto has solved various problems in the online community. Being decentralized and completely transparent eliminated the risk of numerous malpractices done behind a shield of anonymity. However, the world was beginning to see a different kind of online ‘crimes’ within the blockchain, where the very decentralized concept has enabled its users to facilitate hacking. One such incident is Axie Infinity’s recent Crypto hack.
One of the earliest crypto hacks was the DAO incident back in 2016 when a user had managed to hack into the funds by using some vulnerabilities within the code. Unfortunately, these loopholes made the hack legal on paper. In the wake of this, Ethereum had split into Ethereum classic and modern-day Ethereum.
Following this incident, Ethereum had made amendments to its code to prevent other malpractices of blockchain technology. However, on 23rd March 2022, another major crypto hack had occurred within Axie Infinity’s gaming community which uses Ethereum based cryptocurrencies.
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Axie Infinity is an NFT video game that runs on the Ethereum network. Sky Mavis developed it. The game focuses on collecting and breeding pets known as Axies. One needs to pay to be able to participate in the game. In return, they get the opportunity of earning Ethereum coins as they progress. Many people, especially from the Philippines, are making a living job by playing the game.
Axie Infinity is one of the biggest video games that has gained widespread popularity among users. One needs 3 Axis to be able to play the game, and these Axies are represented as NFTs. Axies are unique entities, and the users can trade them for real money on various platforms.
The crypto hack: How did it occur?
On March 23, 2022, The ronin network took it to Twitter to announce that there had been a hack in their network. The ronin network is a medium that allows the interaction of the Axie Infinity gaming platform and Ethereum. It will enable the transaction of money between the both of them. Usually, to make a withdrawal of money, the code requires nine validators to check the transaction and five signatures. However, the hacker has found a loophole through the gas-free RPC code to acquire the signatures of the validators.
The hack involves 173,600 Ether and 25.5 million USD, comprising a 615 million dollar loss.
The company has temporarily frozen the ronin network following the attack and disabled Katana DEX to prevent further hacking. In addition, they are working with chain analysis to monitor the stolen funds.
As of 31st March, the company has claimed to replace all its Sky Mavis validators. As of 2nd April, the Binance network has resumed its withdrawals, although the ronin network is still closed. To monitor the new critical updates, click here.
The chief operating officer of Sky Mavis had assured the users that they will receive their funds back soon. One of the essential things to note following this attack is that the cryptocurrencies’ trends have remained unwavering despite the news of this major crypto hack.
The postponement of Axie Infinity’s Origin following the crypto hack
Axie Infinity’s new game called Origin was set to launch on 27th March. However, following the crypto hack, the company has decided to prioritize stabilizing the security of the ronin network and work towards reimbursement of the lost funds of its existing users. Due to this, the launch will now be happening on April 7th.
Why are crypto hacks on the rise?
When blockchain technology first came to the world, people marketed it to be highly secure and unhackable. However, data from after 2017 suggests that there was a $2 billion loss due to hacking events on the blockchain. This severely compromises the users’ trust in blockchains. In the case of centralized systems, when hacks occur, the authorities can reverse the process and undo certain transactions. However, the blockchain disables everyone from undoing any transaction, which could be one of the downfalls of a decentralized system. One cannot find anyone to hold accountable.
Biggest crypto hacks of all time
Although the recent Ronin network crypto hack was one of the most expensive, plenty of other such hacks made it to the headlines in the recent past. For instance, in 2021, a popular platform called Poly Network, which enables the transfer of tokens between different blockchains, suffered a loss of $611 million due to a hack. Furthermore, in January 2018, hackers stole $547 million from Coincheck, a Japanese crypto exchange company.
Crypto hacks on individual accounts.
Phone porting attacks are a few common ways individual users lose their crypto assets. The hackers gain access to the users’ phone numbers by monitoring their activity on the internet. They eventually end up gaining access to their digital wallets as well. For example, a virtual reality developer named Cody Brown had claimed that he had lost $8000 in cryptocurrencies. A similar incident occurred where Adam Dachis had claimed to have lost $10,000 in cryptocurrency due to hacking.
Although blockchain technology aims to provide complete security to the users’ assets, it has failed to protect the users’ interests many a time. However, one must also realize that thefts occur in decentralized and centralized communities, and it is a known risk one takes when one associates himself with a platform. Hence, it is essential to research any blockchain technology or NFT markets before investing in them.