CRYPTO INDUSTRY NEWS #9
The capitalization of the crypto market continues to grow. Hack, theft, and refund of PolyNetwork funds. Coinbase profit increased 50 times. The financial expert explained how Bitcoin is secured.
The capitalization of the crypto market has reached a three-month high
According to the Сoingecko portal, over the past month, the capitalization of the crypto market increased by more than $500 billion and again reached the $2 trillion mark. This is the highest mark after the fall of the cryptocurrency market, which began in May of this year. One of the main reasons was the growth of Bitcoin to $46,000. During the month, the dominant [43% of the total capitalization of the market] cryptocurrency rose by 35%, and its capitalization reached $870 billion.
Following Bitcoin, its largest altcoin, Ethereum, also showed growth [18.7% of the total capitalization of the market]. Over the past month, ETH has risen by 88%, overcoming the mark of $3,200. The main event for the growth of altcoin was the London update, which led to the changing of the accrual calculating mechanism. Some of the commissions that miners previously received are now burned.
Burning is the destruction of a certain number of tokens to reduce their number in circulation. This method is used to combat inflation and increase the value of cryptocurrency. All coin burning operations are recorded in the blockchain as a transaction, so anyone can verify that the coins were destroyed.
On the other hand, the total capitalization of the QRAX coin reached $6.6 million, and the total number of coins is more than 37 million. We remind that the mechanism of burning coins was originally provided by the developers of the blockchain, which has a favorable effect on the growth of the asset value.
Hack, theft, and refund of PolyNetwork assets
Poly Network is a protocol for exchanging tokens between several blockchains, including Bitcoin, Ethereum and Ontology. It was created by the teams behind various blockchain platforms, including Neo, Ontology and Switcheo.
The PolyNetwork protocol was attacked by hackers, which led to the largest theft of funds in the field of DeFi. On August 10, the developers of PolyNetwork announced on Twitter the hacking of the platform with instructions of potential addresses of attackers and an appeal to block these addresses, as well as funds coming from them. Hackers managed to steal:
- $273 million in tokens of the Ethereum blockchain;
- $253 million of Binance Smart Chain;
- $85 million in USDC stablecoin on the Polygon blockchain.
In total, the attackers managed to transfer the equivalent of $611 million of crypto assets to their accounts.
The PolyNetwork platform, which works on the principle of an aggregator, combining different blockchains, announced that hackers took advantage of a weakness in its system.
In turn, experts noted that such a theft is not possible without preparation, which means that hackers have long planned their attack. However, the timely actions of the PolyNetwork administration to install wallets belonging to hackers and the publicity of the general community prevented hackers from freely disposing of the stolen funds.
Immediately after this theft, the platform called on the hackers to return the assets and get in touch with admins.
In addition, the platform identifies the addresses where the stolen cryptocurrency was transferred, so it called for the blacklisting of tokens coming from these addresses.
The actions of the administration and the publication of the hackers’ addresses led to the fact that crypto investors from all over the world entered into correspondence with the attackers, using empty transactions to their addresses.
Most of the public condemned the actions of hackers. However, a user under the nickname hanashiro.eth advised criminals not to use USDT tokens to avoid a complete freeze of funds on wallets.
A similar message attracted the attention of one of the hackers and he sent $42 thousand of ETH in a response transaction. Hanashiro.eth received 13.37 ETH from the criminals, and then transferred it to the address of the creator of Ethereum Vitalik Buterin.
Then representatives of the PolyNetwork project offered the hacker a reward under the bug search program, of $500 thousand, for returning the stolen funds to the company’s accounts. However, the hacker refused the reward. This was announced by the founder of the Elliptic analytical company Tom Robinson, who tracked the attacker’s communication with representatives of the hacked project through empty Ethereum transactions.
A little later, in the morning of August 11, one of the hackers, in an empty transaction, said that he was ready to return the stolen funds.
This was achieved because the creators of the Poly Network project were able to explain to the attackers that they had committed the biggest theft in the history of the decentralized finance (DeFi) sphere, so the actions of the authorities of many countries will be aimed at finding and catching hackers.
The criminal returned to the developers of the Poly Network all the stolen cryptocurrency, except USDT stablecoins for $33 million, which were frozen by the issuer of the coin — the Tether company. However, the identity of the hacker(s) remained undisclosed.
Coinbase year profit increased by 50 times
The Coinbase exchange has published a financial report for the second quarter of 2021. According to an official document, in the second quarter of 2021, Coinbase’s net profit reached $1.6 billion, which is 50 times more than in the same period of 2020.
The revenue of the first public crypto exchange in the second quarter of this year amounted to $2.03 billion, which is 40% higher than the expected amount, while last year it was at the level of $186.4 million. Earnings per share rose to $6.42, according to the company’s financial statements.
According to experts, the company’s positive profit growth is largely due to the increasing number of users and the constantly growing trading volume. The total amount of transactions made by crypto investors reached $462 billion, while in the first quarter it was $335 billion (an increase of 38%).
The shares of the American crypto exchange reached historical maximum value on April 16 of this year, then their value was $342. At the close of trading on August 14, the unit price was $264, which is 23.61% less than the maximum. However, the share price continues to grow.
Earlier, a former official of the US Securities and Exchange Commission (SEC), Brett Redfern, left Coinbase, where he served as Head of the capital markets department. The company explained this by the fact that the trading platform shifted priorities from securities and digital assets to the sphere of decentralized finance.
Expert Chomsky told what Bitcoin is actually provided with
According to expert Aaron Chomsky, Bitcoin is devoid of an inflationary nature and claims to be a new equivalent of value, which has been lost in recent years.
Often, this cryptocurrency is compared with gold, considering it a digital analogue. In addition, Bitcoin is in some way secured by distrust of fiat currencies and the actions of governments and central banks,” said Aaron Chomsky, Head of the ICB Fund investment department.
The creation of Bitcoin was facilitated by the destruction of confidence in fiat currencies, which lost their rigid binding to gold and the US dollar after the rejection of the gold standard. The 2008 crisis showed that the leading central banks for the sake of “saving” the economy can not only lower rates to zero or negative values, but also resort to a quantitative easing program, which implies buying securities from the market by saturating the financial system with liquidity, he said.
“The actual issue allows us to continue lending to the banking system, support aggregate demand and mitigate crisis phenomena in the economy. The reverse side of the coin is the creation of prerequisites for the occurrence of inflation as the economy recovers, which reduces the purchasing power of money and undermines confidence in the provision of currency,” the expert explained
Bitcoin is devoid of such disadvantages. Its issue is limited to 21 million coins and is set by an algorithm that has been operating for 12 years, Chomsky noted.
“Every four years, there is a halving of the issued bitcoins that miners receive for solving a complex mathematical problem. The network is protected from hacking by the computing work of the equipment purchased by them, the volume of electricity consumption of which has become comparable with individual countries. This can be considered the security of Bitcoin,” the expert said.
At the same time, the growth path of the Bitcoin audience corresponds to the growth in the number of Internet users at the dawn of its appearance.
According to Cambridge University data for October 2020, the audience of Bitcoin has expanded from a small group of libertarian cryptographers to 101 million people, he noted.
In the last couple of years, institutional investors have also become interested in cryptocurrency. Many large banks in the United States and Europe are ready to open access to Bitcoin to their customers, but so far this is hindered by the remaining regulatory uncertainty.
“This regulatory uncertainty creates risks for investors. The authorities of the whole world are not happy with the prospect of creating a monetary system beyond their control. This is a loss of monetary sovereignty with risks for the economy. Such rejection can be expressed either in a total campaign to ban cryptocurrency-related activities, as in China, or strict overregulation, which is actually happening in the United States now and has been supported by other countries,” Chomsky concluded.