coingeek.com
Several times this year, we’ve reported on huge heists involving so-called cross-chain bridges. On Monday, July 1, the Nomad bridge was exploited, and nearly $200 million in funds were stolen.
This is the third largest exploit this year, coming in behind the Wormhole and Ronin exploits in which $320 million and $625 million were stolen, respectively.
What happened with the Nomad cross-chain bridge exploit?
1/ Nomad just got drained for over $150M in one of the most chaotic hacks that Web3 has ever seen. How exactly did this happen, and what was the root cause? Allow me to take you behind the scenes 👇 pic.twitter.com/Y7Q3fZ7ezm
— samczsun (@samczsun) August 1, 2022
To put it in simple terms, the smart contract that comprises the “bridge” for sending ERC-20 tokens between blockchains had a bug in it, allowing an initial attacker (or attackers) to begin draining funds from it into multiple wallets.
Soon thereafter, users from around the world joined in, draining funds in what has been labeled a “frenzied free-for-all” that saw almost $200 million in Wrapped Bitcoin (WBTC) and USDC stolen.
The increasing argument for one global blockchain
Again and again, the digital currency industry experiences the same movie repeatedly; unscalable blockchains can’t handle the transaction volume, so greedy token issuers who want to get as many buyers as possible build digital “bridges” between the patchwork quilt of broken blockchains. Then, inevitably, an exploit occurs, and innocent people lose millions.
Tragically, all of this stems from the mistaken belief that Bitcoin, the original blockchain released by Satoshi Nakamoto, doesn’t scale and can’t make smart contracts. Even though this has been proven objectively false by Bitcoin SV, which is the original Bitcoin protocol restored, the industry continues to run with this false narrative due in no small part to the huge amount of funding available for new blockchain projects. For example, just this year, the team behind Nomad raised $22.4 million in funding. Its backers include firms such as Coinbase (NASDAQ: COIN) and Opensea.
It seems that every day, the argument for one global blockchain is getting stronger. With each failure, hack, and heist, it’s becoming increasingly clear that Satoshi was right and that there was never any need for this litany of amateur blockchain projects.
Trust in digital currencies and blockchains evaporating
The Nomad hack, along with the Wormhole and Ronin exploits earlier this year, will do nothing to restore confidence in an industry that is already characterized by crime, hacks, and endless technological failures.
As the SEC clamps down on leading firms like Coinbase and rogue exchanges like Binance rush to delist tokens to avoid incurring yet more heat from regulators, confidence in the already beleaguered digital currency industry will only sink further as enterprises and large investors begin to wonder what it’s all about and whether their investments can possibly be safe in what can only be described as a lawless pseudo tech circus.
Code is not law when it suits the agenda
Long-term observers of the industry will be in no doubt that stunning acts of hypocrisy are par for the course and that narratives change quickly according to the direction of the wind.
While founders like Vitalik Buterin promote the idea that code is law, the teams behind projects like Nomad are only too happy to work with law enforcement when large amounts of money are at stake. The Nomad team announced that it was working with law enforcement and aimed to “identify, trace, and recover” the stolen funds. Apparently, nobody has explained to them why these goals are incompatible with concepts such as decentralization, anonymous transactions, and censorship resistance.
The original Bitcoin is and always was the solution
Of course, none of this would even happen if Satoshi Nakamoto‘s original invention had not been hijacked, kneecapped, and twisted beyond all recognition.
Satoshi repeatedly explained that Bitcoin had no scaling ceiling, eliminating the need for layer-two scaling solutions and the bridges between multiple unscalable blockchains that allow these sorts of exploits to occur. He’s been proven correct about that as Bitcoin SV, his original protocol restored, can already handle 100,000 transactions per second, and it will soon be able to handle millions, then billions, due to its unlimited block size and scaling solutions like Teranode.
Satoshi also explained how the system had a built-in alert key, allowing stolen funds to be easily tracked and traced, alerting exchanges and miners globally in an instant. Had some early bitcoiners not become obsessed with the notion of node decentralization at all costs, it would have been relatively simple to issue court orders compelling nodes to freeze stolen funds and move them back to their original owners. Of course, this is only possible if nodes are identifiable as Satoshi intended, which appears to be heresy in the crypto industry today.
Sadly, the world didn’t recognize what Satoshi had given us. So here we are, yet again, dealing with another colossal heist brought about by a combination of technical failure, incompetence, and commitment to impractical ideology. Once again, innocent people have lost millions, but the druids of decentralization will simply shrug, say that nothing can be done, and build another failure to replace this one.
When will they learn? Probably never. It’s up to users to abandon these failed projects and embrace the only one that works—Bitcoin SV.
Watch: The BSV Global Blockchain Convention panel, The Future World with Blockchain
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.