A Disappointing Month: Price Drops, People Fight, Security Loopholes Glare
If I have to use one word to describe these last couple of weeks, that word would be “disappointing.” I am not talking about the continuing price crash of cryptocurrencies, which has not been at all encouraging. However, if you have been in the market long enough or have some experience in financial markets, you should know that the kind of softness we are seeing this year is considered normal, or even healthy, after the skyrocketing performance of last year. Bitcoin bull David Bailey, CEO of BTC Media, told me we are very likely to see bitcoin drop to $5,000 by the end of the year. However, most people believe the bull will eventually be back since they believe in its fundamental value.
But if I'm not upset by what's happening with the price of cryptocurrencies, here is what’s disappointing: the people. The team at Skycoin claimed that their previous Chinese marketing team, known as EVOLAB, broke into the home of their CEO, who goes by the name of Synth, and detained both Synth and his wife for over 6 hours. Skycoin alleged that the EVOLAB team not only beat Synth but also robbed him of 18.8 BTC and 6,466 SKY. Before the incident Skycoin had already ceased working with EVOLAB, as Skycoin claimed that EVOLAB stole 100,000 SKY in the first half of 2018. Skycoin now is reaching out to the exchanges and trying to freeze the EVOLAB account which, in my opinion, is not in line with the decentralization spirit of blockchain.
And there is more drama besides this violence-tinged robbery. Star Xu, CEO of Okcoin, posted screenshots of a WeChat account on WeChat Moments and alleged that the owner of the account, Feng Li, had borrowed 1500 BTC but never paid it back. That is just the start. Feng Li responded and claimed that the 1500 BTC was Xu's investment into Li's project. Later on, Xu posted part of the script of their chat exchanges and photos of the original contract, and intoned that Li is a liar. I am not here to pass judgement nor do I want to bore you with this tabloid-like fodder. The point I would like to make is, despite all the advances in technology, the biggest risk might well be the humans at the helm, and unfortunately there is no easy solution.
Besides the human factor, security is the other issue I would take a moment to focus on. Less than 10 days, another South Korean exchange got hacked again. This time, Bithumb claimed the hacker made off with tokens valued at more than $30 million. Looks like the hackers have identified the perfect destination for their mischief: South Korea. Many people are asking: why it is always the Korean exchanges? The South Korean Ministry of Science and Technology (MIC) undertook an investigation into 21 Korean exchanges between January and March of this year. They concluded that most of them have security vulnerabilities and in 12 of the exchanges, a security system is totally absent.
Not only the exchanges, but even the most high-profile projects can be overly lax when it comes to security. EOS ground to a halt for over 5 hours last weekend after the mainnet had been live for less than 48 hours. As Dogecoin's creator Jackson Palmer said in his tweet, "making it hard to not be critical folks." I chatted about this with Gustav Simonsson, Ethereum co-founder and CTO as well as one of Ethereum’s early developers. He was the person who had debugged the cryptocurrency for security issues before it went live. Gustav also participated in rescuing the stolen funds during the DAO crisis. Watch the interview here.