In 2018, cryptocurrency hacks and vulnerabilities already resulted in the loss of more than $1.9 billion worth of cryptocurrencies, and one more quarter remains. Consistently, cryptocurrency hacks target security vulnerabilities across a wide array of cryptocurrency-related services, such as cross-chain bridges, third-party wallets, hot wallets, and exchanges.

Cybercriminals targeted several platforms in the first half of 2022Some of these assaults were effective, while others were not. Victor Young, the inventor and principal architect of Analog, a layer-0 blockchain, discussed the escalating issue of cryptocurrency hacks, why they occur, and what can be done to make blockchains and exchanges more secure. Young is also Analog’s principal architect.Blockchain-based transaction recording systems are considered tamper-proof, immutable, and democratic architectures. In addition, these systems lack a single point of failure. The technique uses cryptographic primitives and methods for decentralized consensus to address data security challenges.However, like any other currently accessible technology, blockchain is subject to hacking. An attacker might, for instance, seize control of the blockchain ecosystem by controlling the majority of the hash rate (the blockchain’s computing power) in proof-of-work (PoW)-based networks such as Bitcoin and Ethereum. This kind of assault is known as a 51% attack. A double-spending attack is another blockchain-based attack.

In addition to 51% attacks and wallet hacks, there has been a significant increase in attacks against cross-chain bridges. This rise is mainly attributable to the increasing popularity of decentralized financing (DeFi). The fact that these bridges are centralized suggests they have a single point of failure and make weak trust assumptions. Nevertheless, users can transfer assets across chains utilizing them.

Interoperability protocols are what allow different blockchains to communicate with one another. The term for one of these protocols is a cross-chain bridge. Users can transfer assets, non-fungible tokens (NFTs), and arbitrary smart contract data across disparate platforms using cross-chain bridges, which can connect and link several chains. Cross-chain bridges provide new opportunities for users, but the bridges’ design leaves room for vulnerabilities that hackers might exploit at the expense of consumers. For example, most modern bridge systems need trustworthy guardians to supervise the locking/burning or unlocking/minting of tokens.

Existing trust designs cannot protect their client’s funds, which is problematic when dealing with large volumes of assets. It is much too easy for an opponent or even a nefarious insider to access the permissioned network, take control of the bridge, and steal the funds of users who have not made an initial deposit. It is also conceivable for custodians to lose their private keys, rendering the cryptographic assets unrecoverable.

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Moreover, the underlying smart contract may include flaws. In this context, cross-chain bridges that use poorly constructed smart agreements are susceptible to malicious attacks, increasing customer risk. Hackers are particularly attracted to blockchain ecosystems because they include value; wherever there is money, there is always the possibility of illegal conduct. Due to the rise of both the cryptocurrency economy and DeFi, the crypto hacking industry is rapidly increasing. When paired with the meteoric rise in the value of cryptocurrencies like Bitcoin and Ethereum, the blockchain business offers criminals lucrative opportunities.

However, the rise of online criminality is not restricted to blockchain networks alone. Web2 businesses are operating in a digital world that is not just demanding but also complicated. In recent months, the number of cyberattacks on traditional companies such as Microsoft, Facebook, Yahoo, and Twitter, to name a few, has increased dramatically. Since its introduction during the 2008–2009 global financial crisis, blockchain technology has existed for over a decade. However, placing our trust in a few centralized organizations, such as banks, has not taught us anything valuable.

Existing blockchains, regardless of whether they are based on proof-of-work (PoW) or proof-of-stake (PoS), are not fully decentralized due to substantial entry barriers. In a blockchain-enabled with PoW, for example, the participation threshold is the processing power or hash rate. If you wish to participate in developing the consensus in a PoS-based network, however, you will need to stake a substantial quantity of tokens.

Currently, each blockchain functions independently, making it impossible for consumers and developers of decentralized applications (dApps) to access the potential value. Although various cross-chain bridges are available, the trust and decentralization assumptions behind their core concepts and structures are problematic.Victor said, “We must learn from the assaults and build robust protocols that can withstand any hack.”The Analog network is a proof-of-time (PoT)-based interoperability framework for the Omni chain. PoT is trustless, which implies that any validator with a good ranking score may propose or confirm a block. In contrast, PoW and PoS protocols have substantial entry barriers for validators and demand them to undertake significant labor to participate.

Using ranking score as a parameter leads to the construction of an open network where anybody may join and participate in achieving a consensus without being inhibited by a lack of computer resources or correctly weighted stakes.The Analog network may be broken down into a decentralized collection of tesseracts and time nodes at its most basic level. Tesseracts serve as decentralized “listeners” or “observers” on external chains and may use threshold signature methods to reach agreement on actual states and events happening on connected blockchains (TSS).

On the other hand, time nodes function as decentralized nodes accountable for confirming data about fetched events on the Analog ledger, also known as the Time chain. In this regard, the network’s primary purpose is to perform the two responsibilities mentioned earlier with no need for a single point of failure, i.e., in a way devoid of trust and authorization.