Crypto has a critical edge over traditional finance, achieving transaction finality in seconds rather than days as seen with systems like SWIFT. U.S. Treasury Secretary Bessent estimates that stablecoins may reach $3.7 trillion by 2030, matching Germany’s GDP. Nonetheless, the industry faces a persisting security crisis, projected to lose 4% of its total locked value to hacks this year alone. During the first half of the year, over $2 billion was lost, implicating more than $4 billion could go into the hands of hackers for 2025.
If such losses were observed in traditional finance, it would lead to a catastrophic system collapse. Crypto, however, tends to accept these perilous rates as the norm while questioning why companies like JPMorgan aren’t shifting onto blockchain.
Hacks are more damaging than perceived
The repercussions of hacks extend beyond immediate theft; they impact the entire ecosystem and influence pricing. Hacked protocols experience a median 52% drop in token price over six months, with most not recovering even after half a year. The crypto sector, which aspires to manage significant global wealth, cannot tolerate such theft rates without dire consequences.
North Korean hackers target project teams
Following funding announcements, North Korean hackers initiate social engineering tactics against project development teams. The severity of the problem was illustrated in the $50 million Radiant Capital hack, where malware infiltrated devices during transactions.
We possess the means to combat these threats, including AI-based monitoring systems that can pre-emptively spot security issues before deployment, and comprehensive auditing services linking projects to elite security researchers. Yet many projects still employ minimal pre-launch audits and do not prioritize ongoing monitoring for vulnerabilities, viewing it as an expense until they suffer significant losses.
Ensuring crypto’s readiness for mainstream adoption
To reduce hacking incidents to below 1%, protocols need to adopt robust security measures, such as continuous monitoring and incentivized rewards for security researchers, formal verification for essential components, and AI-driven threat detection. The costs associated with these improvements are minimal compared to potential losses.
Financial institutions recognize rising hack rates, scrutinize the risks, and rightly conclude that crypto isn’t prepared for mainstream adoption. Even though DeFi has weathered market downturns without systemic disaster, the importance of security cannot be disregarded. The choice is clear: adopt effective security tools or concede our market to hackers.
