The Billion Dollar Crypto Heist: How Secure Are Your Mnemonic Keys?

Mudit Gupta, the chief information security officer of Polygon MATIC/USD, a layer-2 scaling solution, shared his insights on the challenges of practical security in the blockchain and cryptocurrency industry. 

During his talk at the Ethereum Community Conference, he highlighted the gap between theoretical and practical security measures in the sector.

Gupta pointed out that while the industry is making rapid strides in theoretical security, it lags significantly in terms of practical security.

He used the example of mnemonic keys, which, despite their theoretical security advantages, pose real-world challenges.

"A mnemonic is just a one-time thing. You have it once. And if you ever make a mistake, if it ever gets leaked, you are done. So, keeping your mnemonic or private key safe is a much much harder problem," he said.

Gupta also revealed billions of dollars have been lost due to individuals misplacing their mnemonic keys.

He further warned that an even larger amount is at risk due to improper security measures.

"There are billions of dollars in the wallets of users that are incorrectly secured," Gupta said.

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While theoretically, private keys offer complete security, Gupta acknowledged the practical issues that may arise. He questioned, "What if you die for some reason? How can your loved ones access your funds? So that's a tough problem to solve. Then, there is the key rotation problem. What if, for whatever reason your key is compromised?"

Gupta also touched upon the difficulties faced by defenders in the security world, stating that attackers have an easier task.

"As a defender, you have to cover every single point. If you leave any hole, someone will get in," he said. "As an attacker, it's easier. You just ignore the secure system. You find a way around. You just have to find one way to break in and that's it."

He emphasized the role of a defender is challenging as it involves covering all potential vulnerabilities.

Despite these hurdles, Gupta affirmed the necessity of defense, stating, "Someone has to defend."

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