Can hacked cryptocurrencies be recovered? Insurance in the modern digital world


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Why Crypto Hacks Keep Happening

Russian President Vladimir Putin is looking for ways to retaliate against economic sanctions, thus cybersecurity is front of mind these days. Fortunately, blockchains have their own built-in security against cryptocurrency hacks: the consensus mechanism.

But what if you want to transfer funds between blockchains? It's the same as "if you wanted to move funds from two different banks," noted crypto investor Corby Pryor on Real Vision's Cryptoverse podcast Monday. "You send an armed car with armed guards, and it's a really stringent procedure." Because if you transfer millions of dollars between banks in a golf cart, it will be robbed or misused."

In other words, cross-chain transactions might be smooth – or disastrous. Bridges are just as important in the New Digital World as they are in the real world!

After all, Ethereum (ETH-USD) is the undisputed champion of NFTs, DeFi, and Web3 in general... However, compared to a Layer 2 blockchain, dealing directly on Ethereum is slow and expensive. Smaller alternatives, such as Solana (SOL-USD), rely on interoperability to attract consumers. So, when bridges are found to be insecure – such as the crypto breach on Wormhole for more than $320 million in February - it's a problem that needs to be fixed right now.

If a hacker attempted this directly on Ethereum or Solana, they would be laughed out of the room. According to Pryor, "security was preserved" on the different blockchains during the February breach. "However, there was no agreement to secure the transactions between the two."

"I would conclude that at least the bulk of the bridges are insecure and vulnerable to being exploited," Pryor adds.

Building a Better Bridge in the New Digital World

"Some bridges and new protocols are emerging that have built bridges within their consensus layer." Flare and Qredo are two of these initiatives. And, to be really honest, I invested in both of them, mostly because I believe in their interoperability architecture."

— HOF Capital's Corby Pryor on Real Vision Cryptoverse, March 7, 2022

Flare Network (FLR-USD) hasn't had much news since it secured $11.3 million in June from investors including Litecoin (LTC-USD) and Terra (LUNA-USD) creators, as well as Digital Currency Group, the parent company of Grayscale and CoinDesk.

Messari's paper presents a strong argument for Qredo Network (QRDO-USD) as a secure solution to the swap conundrum. Trading one crypto for another is "far from easy to execute in a decentralized manner," but after you've made your trades on a centralized exchange, "it is not trivial to go on." Do you want to sell on Coinbase while your assets are on Binance? "Pity," writes Messari's Rasheed Saleuddin. Enter Qredo, which received $80 million in its Series A round in February and was selected for the

Aside from these firms, "Cosmos and Polkadot in particular are major initiatives from credible teams constructing inter-blockchain links that may be more secure than bridges like Wormhole," according to David Z. Morris' CoinDesk piece on cross-chain security.

Cosmos (ATOM-USD) and Polkadot (DOT-USD) are two of InvestorPlace's favorites. They are among the handful to be included in Luke Lango's Cryptocurrency.Mohoagd  portfolio. Polkadot has been addressed previously in The New Digital World; let's focus on Cosmos, as it's been making some moves that are very pertinent to today's debate.

Cosmos: The “Internet of Blockchains”

You can register an interchain account on Cosmos to "trade digital assets and data from other blockchains - without having to change wallets and jump between different platforms."

Traders can avoid those inconvenient bridges by using the Cosmos Hub, which "provides security for such cross-chain transactions and works as a custodian for safely retaining digital assets," according to Luke in Cryptocurrency.Mohoagd. It's also efficient, but less expensive than cryptocurrency exchanges: Cosmos charges "industry-low transaction costs of $0.01" and has "industry-best transaction times of under seven seconds!"

Clearly, Luke and his analysts aren't the only ones who like it. While other cryptocurrencies have been falling since November, Cosmos' ATOM cryptocurrency has held up amazingly well, even reaching new all-time highs in January.

That's when Cosmos introduced Interchain Security, which allows smaller blockchains to share security with the larger Cosmos Hub. Shared security is important to crypto specialists like Ethereum's Vitalik Buterin because it prevents hackers from destroying new communities. How can any company succeed if it is annihilated by a 51% attack before it ever gets off the ground?

Cosmos now offers Interchain Security, which is another benefit drawing fresh development to its ecosystem. And, with over 250 apps and services, "Cosmos is presently the runaway leader" in Web3 hubs, according to Luke.

"Everyone we've talked to in the crypto space thinks Cosmos is fantastic." "The conclusion is that they are currently significantly ahead in the interoperability race," Luke adds.

The Cosmos universe's next project is a housekeeping effort for its Inter-Blockchain Communication (IBC) protocol. Polymer Labs, a company, is developing a protocol that will allow non-IBC chains to join the Cosmos party.

The market for this "internet of blockchains" has enormous potential.

If you add together AT&T (NYSE:T), Comcast (NASDAQ:CMCSA), and Charter  Communications (NASDAQ:CHTR), internet service providers control $485 billion in market capitalization in Web 2.0. . "By 2030, everyone will have access to the internet." "Perhaps 15% of people will be actively involved in blockchain," Luke writes for his Cryptocurrency.Mohoagd. That implies a future worth of at least $73 billion for Cosmos.


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