oinDash’s initial coin offering (ICO) was called to an abrupt halt on Monday, accompanied by the acknowledgment that the project’s token sale had been compromised by hackers. An urgent warning was issued to investors, notifying them of the security breach, and asking them to cease all transfer of funds through the addresses listed on their crowdfunding page.
Though CoinDash caught wind of the nefarious activity quickly, nearly $7.4 million in Ether was redirected to a false address, prior to discovery of the breach.
In the resulting storm of related news and social media posts, concerns over security (not just of CoinDash, but of cryptocurrencies in general) have taken center stage. Because ICO’s are a relatively new method of crowdfunding in an already sparsely-regulated market, there is currently no standard in place for ensuring the protection of new investors – which can leave them exposed to significant loss.
The establishment of trust is paramount to gaining support for any new ICO, and a security breach such as that experienced by CoinDash may seriously undermine the faith of their enthusiasts. Though CoinDash has assured investors that all who contributed funds to the fraudulent address would be compensated accordingly, they’ll lose significant time and traction to the investigation and aftermath of the incident, in addition to a loss of confidence.
Though a security breach of this magnitude is nearly unprecedented, the media is quick to catch the story and run with it – which does nothing to reassure the troves of mainstream users and would-be investors who have been teetering on the edge of acceptance. Thus far, many have been wary of embracing cryptocurrency as a viable method of payment and savings – and incidents which reinforce the misconception that all ICOs are vulnerable to the actions of unscrupulous hackers will only continue to stall mainstream adoption.
While tech-savvy users understand that there are many layers to the story, the perception of the general public is that cryptocurrencies such as Bitcoin and other alt coins are not secure – and this perception stands in the way of their adoption as a daily payment method.
This is why platforms which are based on smart contracts are so important. Take, for example, the CORION Platform, whose decentralized P2P exchange provides a safe, fast, and secure entry point. Their multifunctional wallet is a unique payment gateway, which acts as the main interface – leveraging the data from a full server-hosted blockchain to prepare a secure transaction.
New users register an email address and password to use the wallet, and are then encouraged to select a SecureID. For those who choose to use this optional feature, the server prepares and validates transactions on the client side with a decrypted private key. Private keys are then encrypted , secured by the user’s password and with the optional SecureID.
Still, CORION’s built-in security features don’t stop there. In fact, the built-in exchange is smart contract based, excluding fraud and theft, as well as costly 3rd-party intermediaries – which in turn reduces risk by limiting exposure to direct P2P exchange. Two-factor authentication adds additional protection, as does the use of a secure web application.
The use of secure features such as those offered by CORION does not entirely eliminate the risk of loss – but it certainly reduces the exposure of assets to the threat of malicious actors. In short – all is not lost – and, while it remains to be seen whether CoinDash will survive the aftermath of their breach, it is certainly not a death toll for cryptocurrencies, in general. In fact, it may prove quite the opposite – acting as the catalyst required to inspire other ICOs to beef up their security measures in order to meet those of CORION, Bitcoin, and other high-performers, in order to gain and maintain the trust of mainstream users.
For more information on how CORION leverages advanced tech to improve security, mitigate user risk, and protect the assets of their users, read this recent whitepaper for more detail.
– Marie Kent