Cryptocurrencies have been seen for years as the ultimate replacement for cash and banks. Ok, that may be a bit of a stretch, but cryptos are hot and there is a lot of speculation about them. Sometimes that goes well and sometimes not, just like with investing. One of the advantages of cryptocurrencies is that they are incredibly secure. Pickpockets don’t stand a chance, simply because your cryptos are virtual ‘coins’. And because cryptos are not stored in a bank vault, bank robbers can also stay at home. Yet reports regularly appear in the news that another major crypto theft has taken place. This mainly happens because crypto platforms or wallets are hacked. If that happens, the loot will quickly amount to many tens or even hundreds of millions.
Only $1.1 billion worth of cryptos have been hacked
The good news is that the value of the number of captured cryptos will have fallen sharply in 2023. While more than $3.7 billion worth of cryptos were stolen in 2022 with 219 registered thefts, that amount was about $2 billion lower in 2023, according to a report by Chainalysis. The number of thefts did increase slightly, to 231. This also means that the average size of the loot was considerably lower in 2023. In addition to 2022, 2021 was also a ‘lucrative’ year for crypto thieves. That year, almost 300 crypto thefts captured more than $3.1 billion.
The reason for the sharp drop in money taken from crypto thefts is due to a decline in DeFi hacking. Hacks of DeFi protocols largely accounted for the massive increase in stolen cryptocurrencies recorded in 2021 and 2022, topping $3 billion in both years. In 2023, hackers only stole $1.1 billion from DeFi protocols.
Naturally, a lot of attention is paid to making cryptos even more secure and experts also see progress. Both the decline in raw value stolen from DeFi and the relative decline in vulnerability-driven hacking over the course of 2023 suggest that DeFi operators may be better at security.
“The increase in security measures in DeFi protocols is a key factor in reducing the number of hacks related to vulnerabilities. If we compare the top 50 hacks, based on lost value of the cryptos, from this year to those from 2022, we see a reduction in the percentage of losses from 47.0% of the total to 18.2%,” said an expert.