Quantum-Resistant Blockchains Set to Tackle the Issue of Cyberattacks in Crypto
The Covid-19 pandemic has brought about many changes in how traditional industries operate, with the most notable shift being to digital ecosystems. While there have been significant benefits in this paradigm shift, the year 2020 saw a massive increase in the number of cyberattacks. Criminals are now shifting to digital ecosystems to take advantage of the loopholes and unsuspecting internet users.
According to the latest cybersecurity statistics from Cobalt, cyberattacks are projected to hit an annual loss of $6 trillion in 2021. The report highlights that over 68% of business leaders felt the increasing risks of cyberattacks. Given this imminent threat, Cobalt further noted that cybersecurity spending by firms would likely surpass the $1 trillion mark in 2021. The industry’s demand for cybersec experts is also rising, with over 500,000 open jobs in the U.S alone.
One of the market niches that has taken a big hit from cyberattacks is the nascent crypto ecosystem. This was fueled by the rise of Decentralized Finance (DeFi), an upcoming crypto niche that seeks to decentralize financial services. DeFi hacks in 2020 made up more than 50% of the total crypto market hacks – a significant statistic for a niche that has only been vibrant for a year.
Cyber Attacks on the Rise in Crypto
Cryptocurrencies are one of the primary beneficiaries of the Covid pandemic as more people and institutions moved to accept digital payments. The market capitalization of this industry grew past the $2 trillion mark, although it has now plummeted to $1.2 trillion following the crash of crypto prices in May 2021.
While there was significant growth, it has not been a bed of roses for crypto market stakeholders. Cyber attacks in 2021 are expected to grow with the DeFi ecosystem gaining popularity. A recent cybersecurity report by CipherTrace revealed that over $50 million had been lost within the first half of 2020 alone. Notably, hackers are also using DeFi to launder funds stolen from centralized exchanges, as was the case in the $280 million KuCoin hack.
So, what makes DeFi such a vulnerable niche? For starters, this decentralized ecosystem operates in an unregulated environment. Users can easily access DeFi protocols without providing any KYC details. Even worse, malicious actors can leverage anonymity features to carry out attacks while avoiding being doxxed (publicly identified).
These shortcomings have been a significant hindrance towards banks adopting fast crypto payment solutions despite the value proposition of innovations such as Layer-2 chains.
A Big Threat in the Adoption of Blockchain Tech
Cybersecurity attacks continue to stifle the growth of the blockchain ecosystems as most financial institutions opt to steer clear and minimize their security risks. Banks, in particular, have been sceptical of adopting cryptocurrencies and blockchain, not only because they pose competition but also the cybersecurity risks associated with this industry. Space has not spared even the mighty like Dallas Mavericks’ owner, Mark Cuban, who lost close to $8 million in a DeFi exploit.
Nonetheless, the benefits of crypto innovations outweigh the risks by a magnitude. Banks stand a great chance of improving their transaction speeds by integrating solutions such as Layer-2 chains. These networks have become popular in crypto, given that they solve the scalability issue of Layer-1 blockchains like Ethereum. Should banks move to adopt this infrastructure, transaction times could be increased by over 1000x.
However, their take to progress in moderation can be justified by another upcoming threat, Quantum computing. This advanced form of computation exploits the collective properties of quantum states to solve complex computations. While most of the development is still in the early stages, quantum computing poses a threat to the fundamental infrastructure of cryptocurrencies. Ideally, quantum computers will likely be able to exploit some of the most complex crypto algorithms.
Hybrid Quantum Resistant Blockchain Environments
For blockchain adoption to go mainstream, long-term solutions have to be developed to accommodate institutions. One of the futuristic innovations is a quantum-resistant computing environment that can ensure no computational breaches occur. So far, tech behemoths like Google are among the players that have made quantum computing breakthroughs, with the company solving its first quantum computation in under 3 minutes back in 2019.
Some crypto projects have since followed the footpaths by developing quantum-resistant blockchains. One such innovation is the QANplatform, a quantum-resistant hybrid blockchain platform. This ecosystem allows developers to build and deploy decentralized applications and DeFi protocols within five minutes. In essence, QAN provides the crypto industry with quantum-resistant security to prepare for a secure future.
Notably, QAN’s hybrid blockchain platform has been designed to accommodate both private and public blockchain networks. Financial institutions can build quantum-resistant environments with the option of choosing which information is relayed on the public chain and what remains private. This flexibility is a big plus for institutions that deal with a lot of personal data and at the same time have to share some specifics with regulators and authorities.
Like most blockchain projects, QAN’s ecosystem is powered by the platform’s native token, QANX. Developers can leverage this utility token to pay for contract development and execution on the QAN blockchain. In addition, the token provides a way for node validators to earn network reward fees. The QAN quantum-resistant blockchain ecosystem is one of the leading hybrid projects setting the stage for secure institutional blockchain integration.
Blockchain innovations have proven to be a fundamental part of tomorrow’s infrastructure. Tech giants led by IBM are some of the current investing players, focusing on enterprise blockchain solutions. However, the integration rates are still low and could worsen if blockchain networks don’t shift to quantum-resistant environments.
As more innovations debut, they will likely pivot to quantum-resistant blockchain platforms. One of the main advantages of this technology is its longevity and likelihood of withstanding quantum-computing threats. While it may take a while before quantum computers disrupt existing crypto algorithms, it is only a matter of time before they challenge complex computing environments.
That said, the adoption of blockchain technology by financial institutions will revolutionize traditional finance. Quantum-resistant solutions are at the forefront of spurring this adoption rate or serve as a hedge for long-term sustainability. In the future, we are likely to see more blockchain projects building on quantum-resistant platforms.