Bitcoin Forum

The trend of hacker attacks on cryptos and why many governments don't accept cryptos?

This question and the answers to it come up with enviable popularity, and one might just wonder why governments are interested in regulation.

This is quite clear here. This is a loss of control. And this is a kind of undermining of political power. If cryptocurrency is accepted at the state level, this may result in a loss of control over the movement of cash flows. It is difficult for governments to track the income of cryptocurrency holders, which raises the question of taxation.

And yes, bitcoin is still not popular with many due to various scammers who are doing their best to deceive users. And there is also a lack of good computer literacy in the population in order to use and store their crypto assets correctly.

It's not only that. The news also has an effect on people's opinions about it (quite a large effect actually), and the current trend, from what I can observe, is continued derision of whatever new technology comes out of the production line.

For example:

First DeFi was invented, then the media started criticising that.
Then we had NFTs, with the same effect on the media as above.
Meanwhile, random cryptos are being created that increased in value very quickly comparable to Bitcoin in 2017, so all the media attention was diverted to those cryptos.

And the general reaction to all of these developments was contempt.

With such an attitude among the public, why would you expect the governments to adopt a different opinion about them?

If I am not wrong actual cryptocurrencies are more hack resistant than the digital banking system then this cannot be a barrier to the regulations, and also hackers mostly attack the government security system and asking random in the cryptocurrency mostly in Monero like anonymous coin but the weak point is the security system so can't blame the new technology for an existing weakness.

(emphasis mine)

This is correct, but the majority of cryptocurrency-related crimes involve social engineering which shifts the weak point from cryptocurrencies to the person between the keyboard and chair, ransomware doesn't affect nearly as many people as scams do.

Unfortunately, a great many people are gullible to these crimes but instead of doing anything about it, tech ops and gov. people see it easier to just wipe the whole technology off the face of earth. Not that it will reduce the number of scams of this nature though.

Government would care less if crypto is getting hacked or something. If it’s getting hacked then it’s good for them because that becomes one integrity question so that they can tell us why we not accepting it. But the reality is they don’t want the trouble of loosing centralised monopoly over currency management.

Apart from this, who said fiat never gets stolen? Well fiat is also hacked form the bank accounts many times, even ATM, physical cash loot are another ways to hack it. Nothing is secure and it’s part of crime management rather than accepting which one is safer.

Hacking attacks are mostly in exchange where there are a lot of holes and not on the blockchain itself because its highly impossible except for "blockchain bridges" which happened with Ronin. I consider that similar to an exchange because what happens is a swap to enter a new blockchain.
Regarding the difficulties in regulations, it's not the crypto industry problem but its the one who is trying to regulate it. They want control and power over everything which is just the same as the traditional bank. Why change? Then if they want adoption, it may need an allotted budget to educate people about cryptocurrencies.

As far as I know, crypto is one of the secured space when it comes with store of value. It is more resilient in hacking compared to other apps, platforms, websites, and central organization system because hackers can't easily infiltrate it due to its encryption. However, most people fall victim into scams and schemes. This is mainly because of lack of awareness, being relaxed, and being careless and gullible at the same time, Several hackings that I have encountered were due to human error which cannot be undone and we cannot really blame the security of  crypto because of this since it is the owner's duty and responsibility to verify.

Regarding why the government don't want to accept crypto, this is typically because of the reason that they do not believe in it and they see it as a hindrance in making the traditional fiat system grow. In addition, some government do not really want their citizens to become financially independent and educated because they won't generate taxes and the citizens will be aloof with them. Hence, instead of wholly adopting it, they just regulate it in their own terms, which of course, in a way still beneficial to them.

I can agree with you here. The regulation is not a problem in crypto itself, it is the entity or organization who wants to accept crypto in their financial system. So the regulation depends on the government or institution who wants to accept crypto. Because if a particular organization doesn't have any kind of regulation protocol, it would be hard for them to track down what's going on with their people and so as mentioned, for example, how can a government implement taxation if they have no kind of control around it?

Exchangers/Gambling site/Wallets are the most common spot or target of these hackers on which they do see that these places are honeypots which is understandable considering that they've storing
millions of dollars which is really just that normal that they would be finding exploits and holes in terms of security. Government couldnt fully regulation crypto
literally or technically thats why they do really target out platforms on regulation them specially to those who are attached with crypto services
thats why we are seeing more stricter rules and verification which users need to abide.

Safety and security is probably one of the reasons why some governments are having a hard time accepting cryptocurrencies. It is a wild wild west out there and there are not enough security and safety measures to guarantee and ensure that the consuming public and their money are fully protected.

Whether we like it or not, saving in a bank gives peace of mind to a lot of people. Whatever happens, their funds are insured and accountability is more or less guaranteed. There is a system in place of which the people have become comfortable.

On the other hand, in DeFi in the year 2021 alone, at least $10 billion is already stolen from users. How many of them have actually recovered their funds? How many of the thieves and robbers have been brought to justice? How many developers have been made accountable?

Only Bitcoin among all cryptocurrencies had been accepted as legal tender in some countries until now e.g. El Salvador, Central African Republic and Panama. This is one proof how Bitcoin is the best cryptocurrencies, I won't expect any other crypto will be accepted as legal tender except CBDCs.

The reason why cryptocurrencies didn't get accepted as legal tender isn't only easy to hack, but:
1. It's really easy to manipulate due to low market cap.
2. It's centralized and there's a CEO behind of the project, they can do what they want. Proof of Stake coin where you can burn and mint your coins, it's show how centralized the token is.
3. It's easy to pump and dump, government doesn't like high volatility.

Hackers are everywhere, it's not just all about cryptos but also the traditional banks and as well as the governments are being attacked by them. They choose no one if they're about to attack as long as they can damage and get money from their targets.
They can approve and give permit to crypto companies and adopt it just like any other entities and businesses into their jurisdiction. But, they're not obliged to accept it within their premises to be used for government's services and proclaim it as a currency.

Having crypto currencies into custodial wallet with your own private keys is most secure financial locker I have ever seen to be honest. I agree that banking has existed since many many decades now however, the system is still traditional, so many bank accounts are hacked and I don’t think we hear too many compromises in the crypto currency.

Let me stress one more time, if it’s private keys and custodial then no one can have your coins at any cost. The system is irreversible, can’t be hacked!!

On the bright side the claim is exactly opposite as what you think.

hackers see that the crypto market is a very tempting market to be hacked ,, this is evident from the many cases of hacking and fraud which cause losses of up to billions of dollars .. many governments do not accept crypto because they do not want their currency to be less popular than crypto ,, so many governments now regulate the circulation of cryptocurrencies

"Hacker attacks" is a broad term. It is due to different vulnerabilities like the people revealing their private keys or not securing their devices, most of these can be prevented by the owner of the coins. Exchanges getting hacked are occurring with a frequency of once per year and they cannot be prevented from our side, but measures can be taken to avoid storing coins on exchange hot wallets for long.

But these events and governments not being lenient towards crypto are different in my opinion. Government has their own reason to avoid something that allows tax evasion. It makes crypto a risky asset to store your hard-earned cash in, but that is a risk that the investor has to bear.

In reality, just as there are bank robberies, In crypto we can call hackers as robbers. This is not the main issue, the issue is how to identify them outside. The use of crypto is increasing day by day, as well as the conduct of various criminal activities by it.The  Countries are not legalizing cryptocurrencies because of its high crime rate in lower development countries.

There are more to it! It's not just about the competition of popularity. Cryptocurrency can be used for many illegal things like money laundering, terrorism financing, online gambling (it is banned in many countries), Drugs etc. Also with the NFT market, it has become even easier for the money launderers to launder money.

Cryptocurrency is not really fit for any government to accept and support the spread of it. Another major reason is banking lobby is thoroughly against it from the very beginning.

Have you see how much people are loosing are the moment just because of: 'Volatility'
That is the sole reason why the governmental bodies are not really that keen on integrating the cryptocurrencies with the normal economy and at the same time this is evidently due to 'decentralization' which is a big deal for most governmental bodies so they try and control the market as much as they can externally. It's just just about hacking as you might think, fiat is must easily stolen and so is most of the centralized assets the security there is laughable. It is definitely happening but it's happening slower at the moment but we are seeing fast growing economies integrating the cryptocurrencies.

Are you serious? I haven't seen too many people getting their bank accounts get hacked, in fact I have never heard such a thing before whereas I have seen plenty of crypto projects get hacked constantly. I do not agree with your point of view, I believe that you are wrong about that. I still prefer custodial wallets with crypto inside, over banks with fiat inside but the reason for that is crypto vs fiat not wallet vs bank.

If we could have banks that can hold our crypto, I would put my crypto into my bank account because I am 100% certain that the bank would secure it better than binance or any other exchange and even custodial wallets could.

Online banking systems get hacked all the time. Usually because everything is so centralized, it's easy to get the funds recovered or reversed so it's an easier path to recovery than irreversible crypto's. Doesn't mean people don't still lose money because of their foolishness.

Why would you rely on a bank to hold your crypto currency? Banks, online exchanges, neither serve any real purpose for security. They're merely an illusion giving people a false notion of safety. You can trust yourself, if no one other. You should be your own bank.

They can’t totally accept cryptocurrency simple because they can’t control but some countries left no choice but to adopt and regulate crypto, because if they don’t for sure they will lose their control to their people. Cryptocurrency is a revolutionary currency, this give many people access to financial market and sooner or later government will have to do everything just to collect taxes, and we should be ready for that.