Effectiveness and Importance of Code Audit
In the first eleven months of 2023, over $1.7 billion was stolen from decentralized and centralized digital asset exchange platforms through cyberattacks. Hacking, phishing attacks, and fraud have become more frequent and daring, prompting concerns about the effectiveness of code audits and the security of users’ funds. Davinder Singh, CTO at Rocketx, agrees with those who argue against rewarding hackers. According to Singh, incentivizing hackers to return stolen funds creates a moral hazard and potentially leads to more security breaches.
Trackinf Hackers
While some argue against rewarding hackers, others believe it can help exchange platforms recover stolen funds and identify the perpetrators of the attacks. Fraser Edwards, CEO of Cheqd, explains that the offer and response from hackers provide opportunities to gather information that could reveal their real identities. Nikolay Angelov, Blockchain Head at Nexo, adds that bug bounties not only aid in fund recovery but also help cleanse hackers’ money.
Declining User Confidence
The ability of hackers to easily steal millions of dollars undermines confidence in digital asset platforms. To rebuild trust, platform operators must implement real-time code inspections to prevent vulnerabilities. While bug bounties may be effective for white hat hackers, state-backed hackers are unlikely to return stolen funds. In such cases, operators should seek cooperation with government agencies to prevent stolen funds from entering their platforms. Collaboration, threat intelligence sharing, and advanced defense strategies are crucial for safeguarding the decentralized financial ecosystem.
Hot Take: Rethinking the Approach to Hackers
Hackers who return stolen funds should not be rewarded, as it creates a moral hazard and incentivizes more security breaches. Instead, decentralized finance platforms must focus on preventing attacks through real-time code inspections and cooperation with government agencies. By gathering information from hackers, platforms can identify perpetrators and cleanse their money. Rebuilding user confidence requires strong defense strategies and collaboration within the decentralized financial ecosystem to protect against state-sponsored threats.
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