FTX and the Centralized Failure inevitability
Author: Jacob Lysick, OrionBlockSystems
Cryptocurrency has finally witnessed Centralized Exploitability and Bad Acting, which resulted in the FTX purge. This moment was bound to happen given the current knowledge and understanding for Crypto Investing/Security. A crash like this can leave a bad taste and experience of how Blockchain (Cryptocurrency) operates. This is the time to understand better this emerging technology and how to use it appropriately and securely to avoid critical errors such as the FTX platform.
So, let’s begin here. These digital assets (Cryptocurrency) that consumers invest in are hosted on Central Trading Platforms such as Coinbase, FTX, Kraken, etc. To understand how to secure your assets, we must know that when you purchase a “Crypto,” you also secure a Private key that Validates/Authenticates your ownership of said Crytpo that is hosted on “The Blockchain.” One must understand, the “Key” is how to access your assets over the Blockchain. This lack of understanding of how your Crypto Assets are stored, accessed, and managed can lead to critical mass failures such as FTX.
When purchasing through these trader platforms, with the option of convenience, consumers choose to host their Crypto Asset Access within the Centralized Platform (FTX). This convenience gives the platform complete control of your Access to the Blockchain Assets. One could imagine a trading platform with billions of assets being stored and all Key Management and Assets being in the hands of a few people (Sam Bankman) and what could happen with that type of precise control.
This is where fraud, tampering, and bad acting create an avalanche of negative PR against Blockchain (Cryptos). Allowing your Crytpocurrency to be Centrally Stored can lead to fraud or error, such as the FTX crisis. It’s not the fault of Blockchain or the Crypto Asset, though most of these assets’ viability are questionable to begin with, which is a different story for another time.
Welcome to Orionblocksystems, where we provide security for the Self-Storage of Private Keys on our Hardware Security Module, “OrionX.” This solution prevents Blockchain exploitation such as FTX but let’s apply this same solution to the entirety of Cybersecurity. The Blockchain algorithm is impenetrable, un-hackable, and irrefutable in its Accountability & Auditing measures. Even with a hypothetical Quantum Computer, it would take the known time the universe has existed (6 billion years) for a computer to crack the Blockchain encryption. The fallibility of Blockchain exploitation lies in how your Blockchain Keys are stored.
The current state of National/Cybersecurity falls under the same parameters: exploitation, vulnerability, authenticity, and accountability. Blockchain pertains to far more applications than just Financial Institutions. OrionX technology, paired with Blockchain, can provide security, authenticity, encryption, and responsibility for digital assets and data. Governments, NGOs, and private enterprises will benefit from the OrionX application as they seek to protect assets and data in the blockchain. The current state of National/Cybersecurity falls under the same architecture as FTX Centralization, losing trillions of dollars, not only through breach and fraud but more resources spent patching a dated architecture. There needs to be a transformation to resolve centralization’s critical failures. As we understand, “Cryptocurrency” isn’t the problem. It’s how your Keys are stored and secured to access your digital asset. Apply this analogy to bad actors exploiting our Justice Departments, such as evidence tampering and the fallibility of file sharing. We don’t blame the due process; we blame the conspirator.
OrionX, paired with Blockchain, provides the security of Blockchain Encryption, and now we can hold accountable the bad actors. The Transparency of Blockchain Metadata Authenticates and Audits the transmission via the user’s Biometrics, creating a live-action audit that identifies where/when/who attempted to exploit the information and compromise the Keys of Asset Encryption. The user’s Biometrics are stored on the OrionX device. The user will sign on/off using their Biometrics with OrionX. For example, Nuclear Keys use two people, two keys, each Authenticating the Transmission. Apply that same protocol with the DOJ and 10,000 people who need access to “need-to-know Federal Data.” There must be an intended Distributor & Receiver to Bio-Metrically Authenticate Asset Transmissions between Peer to Peer or Peer to Compartmentalized Institutions, all within the Blockchain Network.
Had OrionX technology been applied and used with FTX, it would have prevented Asset Mismanagement in 2 precise ways:
1.) Digital Assets would be Authenticated with your Biometrics on OrionX, alleviating Centralized Control of your Key(s).
2.) If/when you decide to buy, sell, or trade your assets with the OrionX, all transactions will be Audited and Authenticated through Blockchain, Biometrics & OrionX.
Lost, Mismanaged, or Fraudulent Exploits can be digitally traced and documented to the Singular User of Bad Acting. The digital “paper trail” of accountability can begin with Blockchain Metadata reduction back to the Entity/Person that attempted the intrusion. The exploitation attempt will fail before it even begins.
As mentioned earlier, Blockchain’s Impenetrability and Transparent Metadata provide discovery beyond a reasonable doubt. Imagine the proverbial smoking gun of a Biometric signage exploit that could not be completed and becomes an apparent record of the crime. As in the earlier example of the DOJ, imagine how the path of least resistance materializes for Judiciary due process. This is the crucial aspect of Blockchain; the rules are set and cannot be broken. If you choose to bad act accordingly, you will 100% be caught, and you 100% will fail at cracking the Blockchain Encryption. This is revolutionary accountability of legal litigations and due process, as the investigative discovery has been accomplished before even serving an affidavit. The burden of proof now falls upon the person who thinks they can fool an un-hackable, transparent Blockchain algorithm. This prevents cybercrime before it can even become a thought.
This is the actual utility of Blockchain technology, and Orionblocksystems is here to pave the way for this emerging technology.