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    Home»Cryptocurrency»Warning to South Africans who have bought cryptocurrency – MyBroadband
    Cryptocurrency

    Warning to South Africans who have bought cryptocurrency – MyBroadband

    March 8, 20255 Mins Read


    Those who invest in crypto should exercise caution and implement careful planning because if their crypto happens to be stolen, there is no way to recover it.

    This is feedback from Carel de Jager, research lead for blockchain technology at the CSIR, who explained on The Money Show that if investors lose their crypto and don’t look after it responsibly, “then there’s no turning back and there’s no recovery of those assets.”

    Recently, North Korean hackers stole $1.5 billion (R27.5 billion) from the Ethereum wallet, Bybit, making it the biggest crypto hack of all time.

    “This was an absolutely massive hack,” de Jager said.

    “It completely eclipses all other types of hacks that we’ve had and vulnerabilities and exploits that we’ve had in the crypto industry and that is quite a lot. So it’s a massive, massive loss.”

    He explained that because of the way that cryptocurrencies work, cybersecurity is especially important since once money is stolen that transaction cannot be reversed.

    “There’s no way that you can reverse these transactions. That money is gone. It’s in the hands of the North Korean hackers and there’s absolutely no way to recover it.”

    Much of crypto’s appeal comes from the fact that it is seen as “unhackable”.

    While this is still true, de Jager noted that it is important to make the distinction between the actual blockchain and the applications that are built on top of the blockchain.

    “Think of it as the internet and your banking application that’s built on top of the internet. If you use that analogy, then the internet is safe and the internet cannot be hacked — like the blockchain itself is safe and cannot be hacked.”

    “But the applications on top of them are like any application that’s built on top of the protocol, they are vulnerabilities. We’re still learning these things as time goes on.”

    A portrait of Carel de Jager, research lead for blockchain technology at the CSIR.
    Carel de Jager, research lead for blockchain technology at the CSIR

    Even though all transactions on the blockchain are recorded for all to see — which is how people were able to find out who was behind the recent hack — it does not have identity information, such as ID numbers.

    “An advantage of blockchain, but also a disadvantage, is the fact that those transactions can never be reversed,” de Jager said.

    However, if the stolen cryptocurrency ever ends up in a centralized exchange that does collect your customer data and is subject to compliance and regulations, then action can be taken.

    “But until such point, there’s nothing that we can do about it.”

    Fortunately, that severely limits the places where stolen coins can be used.

    “There’s a big red light shining on that wallet, and authorities and stakeholders all around the world are keeping an eye on it,” he added.

    For example, in 2016, hackers stole 119,754 bitcoins from a cryptocurrency exchange called Bitfinex, which was valued at about $71 million at the time.

    However, the responsible parties, a young married couple, were only arrested in 2022 after making the mistake of purchasing a $500 Walmart gift card.

    By the time they were charged, the stolen bitcoin was valued at over $5 billion, according to The New Yorker.

    “This, of course, was in the US and the federal agencies in the US do have the tools to monitor these things and take appropriate action,” de Jager said.

    “That’s not the case everywhere in the world, but we are looking at it.”

    “But the fact is that there’s an exchange now that has a $1.5 billion hole in its balance sheet. That is massive.”

    Old cryptocurrency mining rigs composed of Antminer S9 ASIC machines operate on racks at the HydroMiner GmbH cryptocurrency mining facility near Waidhofen an der Ybbs, Austria, on Friday, Jan. 19, 2018. Photographer: Akos Stiller/Bloomberg

    Bitcoin was made available to the public in 2009, which means that the industry is still only about 15 years old, and it still has a lot of growing left to do.

    “It’s still a new industry and there’s still a lot of things that we learn. There are definitely a lot of things that we need to get in place,” de Jager explained.

    Many of the protections that are available in traditional finance, such as regulations, safety standards and insurance, do not exist for crypto yet.

    “All of these things need to be developed and it takes time.”

    He noted that the cryptocurrency landscape will likely look a lot different in five years’ time than it does now.

    “There’s a lot happening behind the scenes. It is absolutely crazy.”

    For example, since South Africa’s greylisting, the Financial Action Task Force has made very explicit recommendations.

    “This is more aimed towards money laundering and terrorist financing, of course, but their recommendations also have a lot to do with the safety of investors.”

    De Jager added that global watchdogs like the World Bank have also made extremely explicit recommendations, which are currently playing out on exchanges internationally and in South Africa.

    “The crypto industry is really changing at a massive pace. Some of it’s for the better, some of it for the worse, unfortunately.”

    “There are things that I do not agree with some of the regulations, but there are a lot of things that make the space safer, and easier to use, and the cryptocurrency industry needs to go through this, just like the internet went through it in the 90s.”

    “We need to go through this so we end up in a space that is open for everyone and only for a select few.”


    This article was first published by Daily Investor and is reproduced with permission.



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