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How Secure is Your House? How Secure is Your Crypto?
On March 29, news reports surfaced about the theft of $625 million in crypto currency from an online gaming platform. As if that’s not astonishing enough – the theft was perpetrated with nothing more than a stolen pass key.
According to Sky Mavis, the tech startup whose customers were victimized in the theft:
“The validator key scheme is set up to be decentralized so that it limits an attack vector, similar to this one, but the attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator.”
Got all that? Neither do we. And we certainly don’t claim to be crypto experts.
But the tech wonks who run Sky Mavis presumably are. Yet they still managed to enable a hacker to steal $625 million worth of crypto from their customers with nothing more than a pilfered pass key.
The Sky Mavis incident is just the tip of the iceberg. According to research firm Crystal Blockchain, there have been 226 hacking incidents since 2011 that resulted in the theft of a staggering $12 billion worth of crypto.
We come neither to praise crypto, nor to bury it – but to point out that there are significant risks inherent to virtual currencies and assets (like NFTs) that don’t apply to hard assets. Chief among those is the risk of theft that Sky Mavis customers experienced recently.
After all, there is no virtual “back door” to a bank vault or Fort Knox. There’s no way to virtually steal someone’s house. That is a risk uniquely inherent to virtual currencies and assets, and should be factored into any decisions about whether to invest in them.
Keep your assets safe and secure! Sign up for 2-factor authentication on your investment and email accounts, remember to use a strong password, and do not click on links or attachments from senders that you do not recognize.
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M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. This blog has been provided solely for informational purposes and does not represent investment advice or provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy. Any stated performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Charts and graphs provided herein are for illustrative purposes only. There are many different interpretations of investment statistics and many different ideas about how to best use them. Nothing in this presentation should be interpreted to state or imply that past results are an indication of future performance. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.
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