Why Blockchain is Not Safe
And How We Will Solve It.
In this article, we will explain some of the problems that the blockchain industry is currently facing for mass adoption, and how we will fix those problems. Make sure to read the entire article to understand the full picture.
We will be frank — the headline is a pseudo-clickbait.
But, hold on. Before you leave, we want you to see what we are talking about because there is some truth to it.
The blockchain is particularly good at replacing the need for a third-party intermediary, especially for peer-to-peer transactions. The decentralized aspect of the consensus protocol is what allowed the emerging technology to flourish. However, like everything, this can become manipulated. This particular problem with blockchain isn’t the fault of the technology, rather the ability to maliciously manipulate such a pure concept like decentralization. To better understand what we mean by fraud, let’s create an example.
Imagine you are an individual on the internet looking to buy some merch that you have been dying to have. Similar, on eBay you find a vendor on a seemingly credible site selling the merch you have been scrounging for. You add the item to your cart, follow through the basic check-out process, and hit “send” using digital currency. You receive an email stating that your transaction was received and that your package is on the way. Fast forward 3 weeks, and you are feeling defeated as you send your 12th email to their support with no response since the first email. Since it was on the blockchain you cannot necessarily call your financial institution and claim fraud. Congratulations, you just lost your money.
Now, this specific predicament isn’t exclusively reserved to the blockchain, nevertheless, the lack of a financial institution makes the possibility of retrieving those funds essentially equal to zero.
We will walk you through a little story about our CEO, Angel Mondragon. Angel went on a trip to Europe over the last winter (in 2018). He was autonomously walking through the congested city as a tourist in Paris. The insanely cold weather combined with his inadequate wardrobe induces the start of a head cold. As the cold begins to worsen his cognitive ability drops rapidly, launching Angel into a state of inattentive interaction. Luckily, he stepped into a busy intersection to play his role as a tourist and take pictures, and that is where his phone was scanned with RFID chip. Subsequently, his number was hijacked, and minutes later his emails were infiltrated, and Angel’s exchanges were swept thoroughly by hackers. Similar to the first problem, Angel had no real institution to make a claim to. He spoke to the exchanges but their prompt and polished response was, “we are not liable for your lack of sufficient security.” Angel’s digital currencies were stolen, and he had nowhere to go and there was nothing he could do — it was completely wiped and his accounts were drained.
At least the hackers were nice enough to relieve his number once their (quite efficient) job was completed.
If you watch blockchain news you are probably familiar with the Canadian based exchange travesty that recently unfolded. If you are unfamiliar with the story you can read it here, (How Canada’s Biggest Bitcoin Exchange Lost it All) we won’t inundate you with the minor details. The high-level overview is that the founder, Gerald Cotten, passed away from Crohn’s disease while in India. The loss, as tragic (or controversial) as it may sound, was responsible for nearly a quarter billion Canadian dollars worth of digital assets to essentially evaporate. He was the sole holder of the private key for the address that held the majority of the digital assets in cold storage.
This is the particular dilemma of being either decentralized or having trusted institutions act as third-party intermediaries. All the clients had no way to redeem those dollars and all that digital assets are lost forever, or till the key is located (if ever).
This is more of a bonus section. Scalability is not necessarily a vulnerability problem, but more so a limitation for traders and processors. Blockchain’s ability to create a distributed database that can be public, transparent, and immutable is beautiful. The technology combines storage, transactions, and security into one. The technology can solve many problems such as the double spend attack and changeless write access. The technology even delivered an amazing tool such as smart contracts, and much more, but there are hereditary limitations to the technology.
There are many companies like Iota, Cardano, Stellar, and Ripple that are targeting this particular problem. They are getting close to Visa’s amazing 24,000 TPS but none are quite there. Ripple is unremarkably far sitting at 1,500 TPS.
This poses a problem, especially for traders who demand split-second transaction speeds be the difference between a winning or losing trades.
Where Does This Leave PlutusX?
Here is how we will tackle and fix these problems
Those were the problems with evidence, provided to back those problems and now we want to introduce solutions that we have access to.
We have a proper announcement to disclose this proprietary info in the next quarter, but until then we’d like to say that our solution resolves each one of those problems proposed above. We wholeheartedly believe in the decentralized mission behind blockchain. We wish not to take away that ability for our clients. We instead want to offer our members an opportunity to more safely secure their digital assets in a more sophisticated manner.
Our wallet is much inspired by our MAM. The wallet has a write/read access only and does NOT have the ability to make withdrawals or deposits with client’s money. Similarly, our digital PlutusX wallet will enable clients to have that same level of protection. If they choose to stay decentralized they can continue without much change in their daily interaction with the technology. However, if our members wish to have the capacity to sophisticatedly secure their assets, the process can be seamless. The technology can prevent all the vulnerabilities we described above while simply solving the basic scalability problem. Our decentralized exchange was clocked at ~8 million TPS blowing our closest competitor VISA out of the water. We are no longer competing with blockchain companies like Ripple or Stellar, our new competition is the current status quo and they are far behind.
If we want to bring more freedom to the financial world, reach the masses, and do so using the blockchain technology because of the incredible benefits behind blockchain technology, we need to do so in a way that our clients are still protected from fraud, loss and we as a provider, are able to scale our business using the technology.
We are very excited about this technology and you will hear more about it in the coming weeks.
Thanks for reading! If you enjoyed this article, make sure to applaud us down below! Would mean a lot to me and it helps other people see the story.
Written by: Angel Mondragon. Edited by Patrick Benske (@PBenske)