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The Rise of Blockchain in Cybersecurity
Blockchain companies are proving to be the top performers in the cybersecurity sector, according to a recent study conducted by Swiss researchers. This study, titled “Measuring the performance of investments in information security startups: An empirical analysis by cybersecurity sectors using Crunchbase data,” was funded by the state-backed Cyber-Defence Campus, an organization focused on strengthening cyber defense through collaboration between government, academia, and industry.
Blockchain Outperforms Competitors
The study’s main focus was on measuring returns, and it found that blockchain companies surpassed other sectors such as Artificial Intelligence and cloud services in terms of performance. The study reported that blockchain companies had the highest expected annual arithmetic (AAR) and log returns at 177.27% and 105.42% respectively, which can be attributed to the strong performance of cryptocurrencies over the sample period.
- Blockchain’s AAR: 177.27%
- Blockchain’s log returns: 105.42%
Comparing with Rival Sectors
When compared to rival sectors, such as artificial intelligence and machine learning dominating in terms of funding and private cloud dominating in terms of overall valuation, blockchain outperformed in terms of average returns, solidifying its position as a leader in cybersecurity.
Quick Path to IPO
The study also revealed that blockchain companies are the quickest to reach IPO, with an average time of three and a half years from the first fundraise. In comparison, E-signature took nearly 10 years, followed by fraud detection and cloud cybersecurity, which took around 7 years each.
Challenges in Blockchain Cybersecurity
Despite its success, the blockchain sector faces challenges in cybersecurity. Its perceived lack of security has been a concern for authorities and traditional finance actors, leading to frequent targeting by organized cybercriminals.
Notable hacks in the blockchain space include the Ronin Bridge hack in 2022, where over $600 million in crypto was looted from a vulnerability in Axis Infinity’s Ethereum sidechain. Additionally, reports indicate that in Q3 2023, $685 million was lost to hacking, with a total of $2 billion looted by the end of the year.
A worrying trend has emerged, with a number of attacks being linked to North Korea’s state-backed hacking group Lazarus. An unpublished UN report revealed that the group is being investigated for its involvement in $3 billion worth of crypto attacks, which are reportedly funding North Korea’s nuclear weapons development program.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
