Sep 16, 2022 - Technology

Cybersecurity concerns after Ethereum's Merge

Illustration of a pair of eyes with cubes for pupils, looking around.

Illustration: Brendan Lynch/Axios

Following Ethereum's big Merge to a proof-of-stake security model, cybersecurity experts are watching to see if the switch will make one of the largest blockchains more secure — or less.

The big picture: Proof-of-stake is a relatively new way of processing cryptocurrency transactions that aims to use far less energy than the more dominant proof-of-work method.

  • Proof-of-work requires crypto miners to computationally validate every transaction, while proof-of-stake requires validators to put up crypto as collateral to legitimize transactions.

Why it matters: As of August, hackers had already stolen around $1.4 billion worth of cryptocurrencies this year alone in attacks targeting crypto bridges that connect networks to enable coin transfers.

Details: Cybersecurity experts are split on whether this change in crypto processing mechanisms will lead to increased security because of how untested proof-of-stake is in the ecosystem.

  • Cybersecurity firm Flashpoint predicts the transition will make Ethereum "more vulnerable to malicious cyberattacks in the near and distant future" as hackers look for flaws in the code that happened during the transition and vulnerable node validators they can exploit to manipulate currency prices.
  • But blockchain software company ConsenSys argued in a blog post last week that the transition sets Ethereum up to lower the need for bridges and to split network data into smaller portions for easier, decentralized storage.

The intrigue: Only time will tell which side is right, per Axios Crypto's Brady Dale.

  • Ethereum is by far the largest blockchain to start operating on a proof-of-stake model. Only a handful of newer chains are relying on proof-of-stake, such as Cardano and Solana.
  • Meanwhile, the alternative proof-of-work concept has "13 years of track record in the most adversarial possible environment," Dale points out.
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