New research shows that despite falling digital asset prices, cryptojacking has reached record levels in the first half of 2022.
According to a mid-year update on cyber threats by American cybersecurity company SonicWall, global cryptojacking volumes rose by $66.7 million, or 30% in the first half of 2022 compared to the same period last year.
Cryptojacking is a cybercrime whereby malicious actors commandeer a victim’s computer resources by infecting the machine with malware designed to mine cryptocurrencies. It is often executed through vulnerabilities in web browsers and extensions.
The report stated that the overall rise in cryptojacking can be attributed to a couple of factors.
Firstly, cybercriminals are leveraging the Log4j vulnerability to deploy attacks in the cloud. In December 2021, a critical vulnerability affecting java based logging utility was discovered in the Open Source Library managed by software company Apache. Hackers can exploit it to gain remote access to a system.
Secondly, cryptojacking is a lower-risk attack than ransomware which needs to be made public to succeed. Cryptojacking victims are often unaware that their computers or networks have been compromised.
Finance sector beware
Attackers also appeared to have changed their preferred targets during the period, moving from the government, healthcare and education sectors to the retail and financial sectors.
Cryptojacking attacks targeting the finance sector skyrocketed 269% in the period, more than five times greater than the second highest industry — retail, which saw attacks increase by 63%.
“The number of attacks on the finance industry is five times greater than the second highest industry — retail, which used to be at the very bottom of the list,” the researchers noted.
The researchers, however, noted that the volume cryptojacking attacks began to fall alongside the crypto markets in the first half of the year, as attacks were becoming less lucrative.
They observed a pattern of significantly higher volumes in the first quarter, followed by “cryptojacking summer slump” in Q2. The firm said that based on past trends, Q3 volumes will likely also be low, with attacks likely to pick up again in Q4.
This year's summer decline has also been attributed to a falling in crypto asset prices as markets have shrunk by 57% since the beginning of the year.
Investors are warning of further volatility in the digital asset markets as the International Monetary Fund (IMF) forecasts a slowdown in global economic growth.
The IMF’s July update on the World Economic Outlook titled “Gloomy and More Uncertain” points to “higher-than-expected inflation,” and a contraction of global output as indicators of incoming poor economic growth. The report states in succinct terms that there are likely economic slowdowns ahead.
“The risks to the outlook are overwhelmingly tilted to the downside.”
Macro factors have been linked to the crypto bear market, prompting crypto analyst Miles Deutscher to warn his 154,000 Twitter followers to expect volatility in the markets.
He noted the incoming earnings reports from Microsoft, Google, Apple, and Meta along with the gross domestic product (GDP) numbers from the U.S. could create further turbulence.
Crypto investors are also bracing for a rise in interest rates in the United States this week. Bloomberg reported on July 26 that the Fed is expected to raise rates by as much as 75 basis points, or 0.75%, up to 2.25% in an attempt to tighten its monetary policy and stump inflation.
There are also industry observers who expect the U.S. to be officially in recession when the Q2 GDP figures for the country are published on July 28. Investopedia defines a recession as two consecutive quarters of negative GDP growth.
Meanwhile, founder of Cosmos-based cross-chain decentralized finance (DeFi) hub Umee Brent Xu asked on July 25 in a tweet “Does a macro recession = a crypto recession?”
Cointelegraph quoted the Material Indicators Twitter account on July 25 in reporting that there is “no guarantee that any support holds” after the GDP and interest rate numbers are announced. It added that there may be several days of volatility, echoing Deutscher’s observations.
Elizabeth Gail wrote in Cointelegraph on July 26 that Bitcoin markets were likely to recover when the uncertainty about the current state of the economy and geopolitical tensions are resolved. However, there is no telling how long that will take.
While the economic outlook looks gloomy, the IMF pointed out that the sell-offs in crypto since May due to liquidations, bankruptcies, and losses at major firms like Celsius, Three Arrows Capital, and Voyager Digital Holdings have had little impact on other financial systems.
This suggests that as the broader financial systems can have a massive effect on crypto, the same cannot be said the other way around.
“Crypto assets have experienced a dramatic sell-off that has led to large losses in crypto investment vehicles and caused the failure of algorithmic stablecoins and crypto hedge funds, but spillovers to the broader financial system have been limited so far.”
As of the time of writing, the total crypto market cap is sitting just barely over $1 trillion according to the TCAP Index.
Disappointing earnings reports and GDP numbers this week could spoil these levels as Cointelegraph reported on July 25 that investors are already starting to seek shelter in fiat in preparation for the worst.
Solana-based decentralized finance (DeFi) firm Unstoppable Finance has argued that Solana is more decentralized than people make it out to be. However, there’s another side that believes that the blockchain platform is actually more centralized.
In a blog post, the DeFi firm lays out its arguments, citing the blockchain network’s active validator count, Nakamoto coefficient and support for validator hardware, which is often argued to be expensive, as reasons for the network’s decentralization.
According to the post, Solana’s validator count is much higher than most other chains, excluding Ethereum. Additionally, Unstoppable Finance points out that Solana’s Nakamoto coefficient, a metric that measures the distribution of staked tokens and decentralization, is much higher than protocols like Cosmos and Near Protocol.
Regarding the criticisms that Solana’s validator hardware is expensive, Unstoppable Finance argues that Solana has already created a server rental program that deals with the issue. Despite the arguments in favor of Solana’s decentralization, some community members cannot be convinced that the platform is decentralized.
Twitter user Les_teezy believes that Solana's network outages are not the main problem; instead, the network is “too centralized,” giving only a few the influence to shut down and restart the network. The Twitter user highlighted that without decentralization, the network is just the same as any traditional system.
A month ago, a Reddit user who claimed to be a software developer called Solana a scam, comparing it to an SQL database implemented by traditional finance. The Redditor wrote that if a central group can roll back a ledger, it’s similar to centralized finance firms.
In June, Solend, a lending protocol based on Solana, initiated a controversial action to take over the wallet of a whale to avoid liquidations. The move received huge pushback from the community. Eventually, the team backpedaled and focused on other solutions that don’t require taking over the wallet.
This Daily Dose was brought to you by Cointelegraph.