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Achieving Equilibrium Between Blockchain Security and Decentralization (Op-Ed)

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By Trevor Traina, Founder and CEO of Kresus

You are reading these words because our planet is orbiting the sun at just the right distance to neither fry nor freeze us. Our planet is perfectly balanced for life to thrive. And within that world, numerous other forces exist in a state of optimal balance: light and dark, tropical and polar, terrestrial and aquatic.

So it is when it comes to designing blockchain systems. Their most powerful forces must be balanced in such a way that one cannot usurp another. Security should be as high as possible, but this must be balanced with the need to maintain sufficient decentralization. Network fees should be low but not so low as to induce spam attacks.

Finding that Goldilocks zone, the place where conditions are just right, is as much an ideological challenge as it is a technological one. After all, blockchain systems are ultimately designed and used by people who are only as strong as their weakest link. Web3 systems must walk the line between being optimized for security and for decentralization. It’s a delicate balancing act that goes to the very heart of what makes blockchain valuable.

Too Much Decentralization Can Kill You

There’s such a thing as too much freedom, which is why societies have laws and moral codes to regulate the worst excesses of human behavior. When it comes to Web3, it’s similarly possible to have too much freedom (i.e., decentralization) in the form of systems that have no recourse for worst-case scenarios:

  • A team member loses their multisig key
  • A user loses access to their wallet
  • Tokens are sent to the wrong address
  • A coding error leaves funds locked into a smart contract
  • Assets are stolen using an exploit

All of these are “bad things” by Web3 standards, yet they occur every single day. As new users enter the space, the number of victims of phishing attacks, front-end injection, wallet poisoning, and other exploits will continue to rise. Attackers are getting more sophisticated, while each wave of Web3 users remains as vulnerable as the last.

Only recently, scammers used wallet drainers on Google and X ads to steal digital assets worth close to $60 million. Back in July, meanwhile, it was reported that four separate wallet drainers had stolen close to $65M since the start of 2023.

Give a society too much freedom, and a few of its members will rob, assault, and injure, driving at high speeds and engaging in other risky behaviors. Give Web3 users too much decentralization, and a portion will hack, be hacked, lose access to their wallets, and generally screw up.

Real-world freedom is dampened through security: police forces and CCTV. And blockchain freedom (decentralization) is also mitigated through security, which must be set at the right level to protect users from the most common mistakes while retaining the features that make blockchain so powerful:

  • Strong transaction finality
  • Lack of centralized control
  • Support for financial self-sovereignty

Some crypto users want full control over their assets while also maintaining an undo button if they screw up. Others shudder at the thought of non-custodial wallets being “weakened” through provisions such as social login, seedless design, and key shares held by the developer.

Too Much Centralization Can Kill You

Do you know that saying about pleasing some people some of the time but not all of the people all of the time? That. When it comes to securing decentralized systems, it’s hard to create a single product that satisfies every user type. Put in too many safeguards, and hardcore users will abandon you; force new users to record a lose-it-at-your-peril seed phrase, and sooner or later, they’ll come unstuck.

Add too many centralized levers into a supposedly decentralized protocol, and you risk weakening the very foundations that gave it strength. Consider an ERC20 token contract that is upgradable by its creator. On the one hand, this allows the token’s parameters to be updated to reflect a shift in direction. On the other hand, it allows unscrupulous token creators to rug their operators.

As a result of this dichotomy, DeFi developers must strike a delicate balance between providing users with autonomy over their digital assets and making sure they aren’t taken advantage of by scammers seeking their next mark. Crypto wallets need to be more secure, but developers fear overstepping the boundaries of the decentralized wallet they’ve created.

Go for the Low Hanging Fruit

So what’s the solution? Well, for one thing, developers need to implement security features that can solve real threats – not theoretical ones. Less “military-grade encryption,” in other words, and more practical measures to warn users when they’re connecting to a spoofing site or about to send funds to a known phisher.

A lot of this comes down to better UX and more common sense on behalf of developers. For instance, it would be easy to filter all address poisoning attacks in which a user receives a dust transaction from a “lookalike” wallet they’ve recently interacted with. So why’s no one doing it?

Let’s focus on thwarting the most common hacks and scams before we move on to tackling threats from quantum computing and theoretical MiTM attacks. Hackers don’t go for the toughest possible exploit conceivable; they go for the low-hanging fruit, chalking up easy wins where possible. DeFi developers need to follow suit, focusing on fixing the most common ways in which users get rekt.

Security and autonomy don’t have to operate in conflict with one another: with a little thought, it’s possible to have the best of both worlds, combining the power of non-custodial ownership with a web2-level UI that demystifies everything from transaction signing to wallet backup.

Our planet may be perfectly balanced for life to thrive, but the on-chain environment still has some way to go. Still, it took the earth millions of years to create a climate that was hospitable for intelligent life. At just 15 years of age, blockchain has time on its side.

Author bio

Trevor Traina is the Founder and CEO of Kresus, the go-to Web3 SuperApp that combines a crypto wallet and an NFT platform. He is an investor and seasoned entrepreneur who co-founded five companies that were acquired by the likes of Microsoft, MasterCard, and Intuit and served on multiple non-profit boards such as the Fine Arts Museum of San Francisco and the Venetian Heritage, among others. Trevor served as the U.S. Ambassador to Austria from 2018 to 2021.

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Cryptocurrency

Bitcoin Price Analysis: Is BTC Out of the Woods After 8% Correction?

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Bitcoin has faced notable selling pressure at the $111K range, leading to a bearish rejection. Nevertheless, the price lacks sufficient bullish momentum and a deeper correction seems plausible in the mid-term.

Technical Analysis

The Daily Chart

Following its breakout above the previous all-time high at $109K and printing a new peak at $111K, Bitcoin met strong resistance that has sparked notable selling pressure. The failure to sustain momentum above this key psychological level has resulted in a bearish rejection, pushing the asset back below the $109K threshold.

This price action coincided with the sweep of buy-side liquidity resting above the previous swing high, allowing smart money to execute sell orders efficiently. As a result, the market has entered a corrective phase, now approaching the daily fair value gap (FVG) between $97K and $100K. This zone likely holds substantial demand, potentially acting as a support zone that could trigger a bullish reaction.

Should the price stabilize within this FVG, a rebound toward the $111K resistance becomes likely. Conversely, failure to hold this level could pave the way for further downside, with the next key support residing near the $95K region.

The 4-Hour Chart

On the 4-hour timeframe, intensified selling pressure at the $111K resistance has caused BTC to break below its previously maintained ascending price channel. The subsequent pullback toward the broken channel boundary near $108K has confirmed the bearish breakout and suggests weakening momentum.

Currently, the price is consolidating within a critical support-resistance band spanning from $100K to $108K. As long as Bitcoin remains within this range, short-term volatility is expected. However, a decisive breakout, either above $108K or below $100K, will likely set the tone for the next significant move, with either a bullish recovery or an extended correction unfolding based on the breakout direction.

On-chain Analysis

The Realized Price of mid-term holders has consistently functioned as a pivotal support or resistance zone, making it a valuable indicator for gauging broader market sentiment. This metric, representing the average on-chain acquisition cost of UTXOs held by long-term investors, often aligns with key turning points in Bitcoin’s price cycle.

Currently, Bitcoin remains positioned above the Realized Price of the 3–6 month holder cohort, a signal that this group remains in profit and has not faced significant stress. However, recent selling pressure and a rejection from the $111K level have dragged the price closer to the Realized Price of the 3–6 month holder range, which resides around the $98K zone.

This places the $98K–$100K area in the spotlight as a crucial support region. A firm reaction from this zone would confirm continued confidence from mid-term holders and may act as the launchpad for a renewed bullish leg, potentially propelling Bitcoin to fresh all-time highs. Failure to hold this support, however, could shift market sentiment and open the door to deeper corrections.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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Cryptocurrency

$200M Crypto Scam: OFAC Sanctions Funnull as Experts Find Ties to Huione Pay, Triad Nexus

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The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Funnull Technology Inc., a technology firm headquartered in the Philippines, and its administrator, Liu Lizhi.

The company has been implicated in running a “pig butchering” scam.

$200M Scam Uncovered

According to the official press release, Funnull has stolen over $200 million from American investors. OFAC has also placed two of Funnull’s cryptocurrency addresses on its Specially Designated Nationals (SDN) List to restrict their access to financial systems.

In response, the FBI’s Internet Crime Complaint Center (IC3) issued a public advisory, outlining key technical indicators, such as infrastructure components and IP addresses tied to Funnull’s scam operations.

Deputy Secretary of the Treasury Michael Faulkender, in an official statement, said

“Today’s action underscores our focus on disrupting the criminal enterprises, like Funnull, that enable these cyber scams and deprive Americans of their hard-earned savings. The United States is strongly committed to ensuring the continued growth of a legitimate, safe, and secure digital asset ecosystem, including the use of virtual currencies and similar technologies.”

Connection to Triad Nexus and Huione Pay

According to the findings by blockchain intelligence Chainalysis, Funnull Technology Inc. enabled cybercriminals by purchasing IP addresses in bulk from major cloud service providers and selling them to operators of fraudulent investment platforms. This infrastructure allowed scammers to host malicious websites that mimicked legitimate investment platforms, thereby deceiving victims into investing in non-existent opportunities.

Funnull was a central player in a network dubbed by security researchers as “Triad Nexus,” which includes more than 200,000 unique hostnames, many of which are associated with investment scams, fake trading apps, and suspect gambling networks. OFAC identified two crypto addresses linked to Funnull Technology Inc., used for receiving cybercriminal payments.

These addresses are tied to scam-related infrastructure and show connections to Huione Pay, which was recently flagged by FinCEN as a major money laundering concern.

Further investigation by blockchain security firm Elliptic revealed that the two addresses in question received more than $4 million in total.

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Bitcoin to $150K or Back to $92K? Traders Divided as Market Cools Off

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Bitcoin (BTC) smashed a fresh all-time high (ATH) of $111,814 on May 22, but the party may be over, at least for now.

After rallying by more than $15,000 over the month, the king crypto has shed $9,000 in the last week alone, slipping to the $103,000 level, putting traders on edge and sparking new debate: Is this a healthy cooldown or the start of a deeper plunge?

Technical Red Flags Flashing

Volatility is back with a vengeance. In the last 24 hours, BTC has swung between $103,300 and $105,000, reflecting growing market uncertainty. Zooming out, it’s still up 9.1% in the last 30 days and 52.1% over the past year, but the momentum seems to be fading.

According to data shared by analyst Axel Adler Jr., Bitcoin just triggered four consecutive sell signals on CryptoQuant’s Net UTXO Supply ratio. “This is a typical pattern for an overheated market phase, where profit-taking occurs and demand begins to lag supply,” he warned, highlighting the red flag that often comes before short-term tops.

Further, the market watcher pointed to two possible scenarios for the asset: a sideways purgatory, with BTC drifting sideways between $95,000 and $105,000 for weeks, or a mid pullback that could see it plunge toward $92,000 in a bid to “relieve overbought conditions.”

Betting Big on Bitcoin

However, others are more optimistic, or delusional, depending on who you ask. According to BetIdeas in an email to CryptoPotato, there’s an 80% chance of BTC hitting $120,000 in 2025, and a 40% shot at $150,000.

“The volatile nature of crypto is what will always grab the headlines but with the upwards trend in May with Bitcoin being increasingly positive, it looks as though a big run for Bitcoin holders is coming,” wrote spokesman Steve McQuillan.

He stated that traders on the platform had placed a 22% chance on a run toward $200,000 before the end of the year.

Meanwhile, popular analyst Daan Crypto Trades has pointed to the zone between $97,000 and $99,000 as a key level to watch for a potential bounce, citing Fibonacci retracement levels and the 200-day moving average.

Elsewhere, Michaël van de Poppe doesn’t seem too fazed by the current goings on in the market, terming it “consolidation and correction,” which, in his opinion, is “very healthy and normal.”

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