Cryptocurrencies stolen in the largest theft ever in the history of “money”!
19th Century. When it came to money theft, bank robberies were at the top of the list. In western movies, tough guys robbed banks in masks with guns in their hands. It was easy to steal money as long as one’s face was not exposed. The tough bad guys would just threaten the bank employees, rob them, and run away.
20th Century. Safes were modernized, and with them, security technology (strong doors and encryption) grew by leaps and bounds. The bad guys in the movie could not open the safe by just being strong, and unless they were accompanied by a science-y nerd, they could blow up the walls but could not break the safe’s encryption.
And the 21st century. No more masked thugs threatening you at the bank counter. There is less cash in the bank to begin with. The age is the Internet. Most transactions are now done online, not over the counter at the bank. The cashless society has made bank robberies a thing of the past.
There is almost no cash money in the world today. Only 10% of the money in the Eurozone is cash in circulation. The rest is made by bank computers as digital numbers. What this means is that when you apply for a loan and are approved, the bank staff inputs the numbers to create the money.
Even QRs can be easily stolen if they are replaced with fake QRs. Rather than thinking that North Korea is a superior hacker nation, it can be said that even North Korea can easily steal from the Internet age security situation. The present age has become the most stolen era in the history of mankind.
Now, the main issue is cryptocurrency. Unlike legal tender, which is guaranteed by the government, cryptocurrencies are created by the private sector on their own. Since the government does not guarantee the credibility of cryptocurrencies, the credibility of cryptocurrencies is maintained through the authentication of digital data by people on the street, known as miners.
But to begin with, cryptocurrencies have an inherent weakness.
◆Weak settlement power (time-consuming ledger entry and lack of immediate settlement power of money)
Cryptocurrencies are made up of multiple blocks, called a blockchain. And the currency is ledger-entry, which means that it is stamped with an imprint of who has used it in the past. This is a source of security, but in reality, only a portion of the multiple blocks confirm the past. This is because the longer a cryptocurrency has been in circulation, the longer it takes to check the past ledger. Settlement is slow for a currency. This is fatal for a currency. It cannot be settled immediately after purchase. More to the point, there is even a risk of empty mining because the blocks are not all confirmed, but only some of them.
Unless the serial numbers of the stolen cash bills are known, one cannot tell that they are stolen even if one uses them the next day. The beauty of cash is that it is easy to use because you don’t know who had it yesterday. In other words, cash is a fungible token. In contrast, cryptocurrency is less liquid and less usable because you keep checking its history.
So, when you purchase an NFT piece, it can take 10 minutes to settle the transaction, or it can take several hours. Some people say that we should use new cryptocurrencies that are easier to use instead of the popular Bitcoin or Ethereum, but there are problems when it comes to credibility and circulation, and since they are based on the blockchain in the first place, the work of going to the past ledgers will not go away.
◆Less secure (encryption is being broken and stolen at a rapid rate)
To begin with, the history of cryptocurrencies is the history of theft. The battle against hackers is hundreds of times tougher than against dumb-faced masked bastards. The technological evolution that allows thieves to do this at any time and place has far exceeded the ability of humans to manage.
Earlier, I pointed out that credit card skimming is becoming a bigger problem every year, but even cryptocurrencies, even NFTs, are becoming increasingly susceptible to hacking. No matter how well encrypted something is, it can be stolen by a man-in-the-middle at the stage of exchanging unlocking keys via the Internet. Even Enigma was broken by a team of British geniuses.
Every day, not a day goes by without news reports about cryptocurrencies themselves and the theft of NFTs. Huh? Aren’t they supposed to be safe? A friend of mine in junior high school also had his SandBox land (worth about 1 million yen) purchased via Openses as part of an interest-generating scheme stolen by someone, but the platform did nothing to deal with it. Even if I try to report the theft to the police, they won’t accept it because NFT is just a digital item and I don’t own it. Oh dear.
Multiple Thefts at NFT Marketplace OpenSea Phishing Attack Worth 200 Million Yen – ITmedia NEWS
◆No creditworthiness (repeated hard forks have diluted the value)
It is said that cryptocurrencies have a pre-issuance limit. Without such an assumption, dilution of value will occur. If even a country’s legal tender were to continue creating money indefinitely, the value of goods would be thrown into chaos, inflation would ensue, the country would lose credibility, and the economy would collapse.
Bitcoin (BTC) has an issuance cap of 21 million coins; new coins are issued every four years, and it is said that by 2040 there will be no more new coins, but in reality, hard forks (the act of changing specifications to create a new version) occur regularly and continue to create offspring, so the dilution of value continues. It is just like El Salvador.
And by the way.
◆Tax system in Japan is terrible.
Now, cryptocurrencies have a short history. If you die in Japan holding cryptocurrency, your surviving family members are subject to two taxes. First, the value of the asset at the time of death is taxed: if you bought it for 300,000 yen per ETH and the market value at the time of death was 1,000,000 yen per ETH, you would be taxed on that market value. Furthermore, if you cannot pay it and sell it as legal tender, you will be subject to income tax on the profit. Therefore, the only way is to abandon the estate.
Given these issues, the boom in cryptocurrencies and the NFTs that are founded on them is limited. However, the field of digital art has had art value for some time, with art festivals such as Ars Electronica for more than half a century. So digital art will not disappear. However, you should understand the fragility of the blockchain on which it is based.
More diversity in “money” will be needed in the future. Both national and local currencies have their own uses.
With the invention of cryptocurrencies, we humans have learned the necessity of a freely cross-border currency. It is a great achievement that this has accelerated the digitization of legal tender in the future.
On the other hand, it is unfortunate that the global gold glut caused by the Corona disaster has resulted in the value of cryptocurrencies fluctuating wildly due to unregulated demand as a source of investment, as investments in stocks and bonds were not enough, resulting in credit concerns. We are also concerned about the current situation where NFTs combined with meta have led to a surge in a myriad of sophisticated scams.
There is an urgent need to develop a fully crypto currency that does not rely on the blockchain.
I think there should be a trend from centralization to decentralization, but we need a more complete, liquid, and perfect currency.
We recently had a conversation with Uri Nakamura, a cryptographic security professional, so please take a look. (YouTube and text available)