Cryptocurrency is a lucrative investment model. The token gained popularity in 2009. Bitcoin enabled users to undertake easy peer-to-peer transactions. The token is used virtually on the internet enabling faster transactions. Each of these currencies is assigned a value enabling users to buy and sell goods and services. With the growing popularity of Bitcoin, many other cryptos entered the investment market.
Every cryptocurrency works on blockchain philosophy. It means the user transaction is broken down into individual units of blocks in the network. Each of these blocks is nothing but an online ledger storing details of user transactions. Such blocks are stored in the form of continuous chains on the network. These blocks are then hosted in the public network and accessible to everyone.
The concept of blockchain attained massive attention. The platform allows for various functionalities including smart contracts, developing decentralized apps, etc.
There are many research and development activities in the blockchain platform today. Many leading financial institutions are exploring blockchain technology to complete transactions. The transactions are comparatively faster and easier compared to traditional mediums.
Understanding smart contracts
Smart contracts are most prominent feature blockchain platform. These are simple understandable programs that are stored on the platform. It automates the functionality of the platform and executes an agreement. Certain predefined algorithms are stored on the platform. Once the conditions are met, a smart contract is executed. The workflow is end-to-end automated enabling the next flow of action on the network.
Let us understand the various benefits of smart contracts. Smart contracts are transparent and executed in a trusted network. Also, every blockchain transaction is secured and has an encrypted methodology on it. Every transaction is connected to its previous record and distributed on the ledger. Also, smart contracts allow users to avoid middlemen in executing transactions. Thus it enables users to gain better savings through this.
Destructive feature of smart contract
Despite all benefits and advantages, there is one disadvantage of smart contracts. The reentrancy attack is a destructive factor in the smart contract functionality. The attack occurs when a particular function tries to make contact with an outside environment. When an untrusted contract attempts to make such contacts there is an attack on the platform.
The contract continues to fail in providing an update. During such a period, the attacker can continuously call for funds. The biggest attack on this type is the FEI attack on Babylon finance.
In the case of FEI protocol, the developers had run many updates to fix the vulnerabilities. But then, two vulnerabilities were overlooked. The attacker took advantage of two open vulnerabilities in the system. By taking advantage of these two protocols, the attacker was able to pool $80 million. The attack happened in April this year bringing down entire Babylon finance operations.
Post this attack, there have been efforts to pool funds. Post the incident, the prices of BABL tokens fell by more than 90%. The token is trading at prices lesser than $0.45.
Sources close to Babylon finance have clarified that the team is working on pooling funds. The firm will work to combine its complete treasury holdings. These holdings will be distributed to all BABL holders in the network. Additionally, the developers have also clarified that investors need to withdraw their holdings.
The firm is planning to completely bring down its operations in November.
Cryptocurrency investments are becoming an interesting investment model. The token gained huge attention due to its speculative investment model. The prices of the token have fluctuated to higher prices. Many early investors have gained more than 100% profits through this investment. The prices of various popular tokens including Bitcoin, and Ethereum gained attention. BTC touched $65k in 2021 all time high. Although the market performance of cryptos is disheartening there is still hope.
Another important aspect that you need to note here is the ability to conduct security audits. The blockchain platform needs to undergo regular security audits. Such audits will allow developers to identify these gaps. Such open vulnerabilities can be addressed immediately. It will also reduce hackers in achieving their act. While cryptocurrency has not reported any direct hacking incidents. There have also been substantial reports of digital wallets reaching the wrong hands.
Check about cryptos on bitcoin-pro.live.