CZ's warning: if a crypto exchange can be hacked, banks are in a worse position — crypto gets attacked first because the rewards are higher, and AI increases the attack ability, making this a wider information-security problem beyond crypto.
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00:00 Uh if crypto if a a crypto exchange can be hacked, banks are in a worse position in my opinion. >> Binance founder CZ issues big warning. If a crypto exchange can be hacked, banks are in a worse position. >> So this is not just a crypto problem. This is actually a much wider um information security problem. >> Binance just experienced the worst hack in human history.
00:23 The biggest hack over $6 billion stolen. and they just revealed the full postmortem. So, number one, let's understand now that we have more information exactly what CZ Binance is warning us about. Ethereum founder Vitalic also just had a very cryptic message about cryptoc. I'll share with you both clips as well as understand which three crypto coins are poised, I believe, to do the best as the world searches for cyber security, the protocols that are the most secure.
00:57 Click subscribe if you're invested in crypto for one video per day, keeping you informed, and let's watch the full clip from the Coindesk podcast. Let's watch the full warning, then react. Um I think number one this is like a a uh real wakeup call for not just crypto but for the overall the financial system overall. Uh if crypto if a a crypto exchange can be hacked banks are in a worse position in my opinion.
01:22 Um uh Binance crypto industry are probably the first tier of uh hacking targets. Um especially Binance being the largest exchange with the largest amount of crypto etc. So we we're always going to be attacked first. Um but attacking us have very high rewards whereas uh attacking banks sometimes they can change ledgers and they can get away with with some stuff.
01:43 Uh but um uh the is the rewards are not the same as crypto. So we get attacked first but the banks are not safe from uh security uh the from the security attack ability increases uh with AI. So um it actually kind of in some sense it actually kind of merges the the two industries together. Also with this in uh instant um I think there's a kind of common understanding that now what impacts crypto may actually have impact on the uh wider uh industry or wider global financial system.
02:17 Um so on the same day when the Binance hacked uh there was a lot of the traditional tech market the stock market was dropping uh the tech stock were were dropping not because of our hack I think but you know uh because uh because of uh certain uh issues in in tech stocks but I think the hack actually probably contributed a little bit to the psychology of it like no are our system or is any system in the world secure.
02:45 So this is not just a crypto problem. This is actually actually a much wider um information security problem. So um yeah, so I think uh um uh yeah, so this does shake some confidence in crypto in uh security, but this is a broader thing than than crypto. So you actually kind of unites the uh uh crypto together with a traditional finance. So in some ways there's a I don't know how to explain it really well that he actually bridges the two together.
03:12 Even current Binance co-CEO Richard Tang on CNBC agrees with CZ that this is a traditional problem, traditional banking problem as well. Let's watch then react. >> We are spending huge amount of money on security every year, right? So if something like this can happen to us, it can happen to everyone. Uh I think what is fortunate in this episode is that you know we bear the full financial impact and users are not compromised.
03:38 We have set aside more than 100% of the funds and replenish the tokens that's affected. Um, and we continue to continue to build from strength to strength. We want to I mean all these hacks and attacks happens can happen to any platform. What set us apart is how we continue to protect users on that front and learn from this episode and become much stronger.
04:00 >> Now the host is going to press Richard Tang that this is just like FDX when this is nothing like FDX because FTX was fraud. This was a hack and Binance to their credit did protect all users. They repaid 100%. It's 98% now, but they're on Kier. It's right now it's 98% but it's about to be 100% of all funds returned to their users, which is awesome.
04:24 They protected users first, which I like. But listen to the CNBC host compare this to FTX. >> Well, I mean, after FTX, that that was the promise as well. The industry promised to be more transparent. it was it to be more secure to be more ready for for prime time and and I think now that question is raised again >> well so FTX and us are very different so the comparison doesn't quite hold there I mean FTX was a case of fraud the customer money wasn't there we did pause uh for a while to make sure that to protect the
04:58 money the customer monies they are there right and we reopened very quickly after that once we rebuilt the system we are confident in our system and we haveed ed to allow customers to withdraw their funds from Sunday. Uh initially we saw a spike but by now it has normalized and if you look at hourly net inflow and outflow is what we see on a normal day and customers can verify the assets through the proof of reserve which during FTX time they cannot and that's the difference verification not just promises >> so all the
05:29 withdrawal restrictions are lifted now customers can take out whatever they want from Binance. So I think we have allowed for withdrawal of the different tokens and they're facing pretty much by now is back to normal. >> Got it. And you say you've replenished me% we replenish 98% of the impacted tokens, right? And the remaining 2% because they are belong to less liquid tokens.
05:52 We need some time to procure them without affecting normal market operations. Right? We do not want to go to the marketplace and purchase them which can affect market prices. So we have to procure them through OTC on that front. Uh but you know those are fully guaranteed. The customers assets are secured and we are in the process of procuring them. >> Got it.
06:14 Well, thank you certainly for coming on and and taking the questions and telling us a little bit about what you've learned and and how you're remedying the situation. We appreciate it. >> So while I do agree that if a crypto exchange can be hacked, banks are in a worse position. I think that's true. I don't believe I can't I think it's gonna be much harder to have a bigger impact than what we saw from Binance.
06:34 What do you think? Do you think banks face a greater threat than crypto? I would say three things to consider. Number one, in favor of the banks, at least banks are FDIC insured up to a certain point, I think $250,000. So they're insured. Crypto exchanges are often not. Number two, and this is a big one, bank transactions can be reversed. Any transaction in a centralized world can be clawed back in crypto.
07:03 It's whoever holds the keys holds the coins and you can't claw it back. That's one of the in innovations in crypto, but it's also a live by the sword, die by the sword. founder of Ethereum, Vitalic Butrin, shared a very interesting message at Devcon on which crypto coins are poised to do the best, offer the best solutions to this problem. Because if you think about it, if only there was an industry that incentivized the best cryptographers from all over the world to come up with the best security problems to even
07:37 industry with the smartest cryptographers. Oh yeah, crypto. Cryptography. Let's listen to the founder of Ethereum's message, then I'll react. It's about two minutes. Keep watching. >> The classic problem with any kind of security is basically who do you trust? Right? And basic and the solution here is openness and verifiability. Right? If you want a uh a path for us to be able to survive and prosper in this new environment, a path that does not depend on handing over the keys to everyone's castle to one small group of
08:12 people, then if you want something that is uh simultaneously respects local self-s sovereignty um and also that enables cooperation, then you want open source. You want innovations that are made in one place to be usable and improvable in other places. You want verifiability. You want to be able to verify use mathematically swap and uh you know we have to like actively push against that direction and cryptographic proofs basically do not prove by revealing all of the information about yourself because then you're
09:20 leaking your privacy and that itself makes you less secure. You prove by proving the specific statement about yourself that convinces someone else that you are someone that is safe and that is a good idea to interact with. These are all things that with zero knowledge proof technology and uh in many cases there's even a role of blockchains can help with.
09:40 Um, privacy is a super important factor in security and trust, right? And uh, we really need to treat data as toxic waste by default. If you can, don't collect it at all. The answer is not to trust no one. The answer is also not to trust powerful corporations. The answer is also not to trust charismatic influencers who claim that they're a good and righteous rebellion against powerful corporations.
10:10 What is the answer? That is something we need to figure out together. Thank you. >> What I glean from his statements are look for the blockchains, meaning the rails that finance in the world I believe will be built on, but look for those blockchains which are either the most decentralized which give us the most protection and slash or the most private.
10:28 Which cryptos are the most decentralized? Well, that's number one and two. Bitcoin then Ethereum. Which cryptos are the most private? Well, right now Zcash is winning the privacy race. I personally tend to believe that privacy, especially in the payment section, just will move to stable coins because they can just add a feature on their stable coin.
10:49 But, uh, if you're looking for privacy, look at Zcash. Or if you want the next Zcash, I would say that's either Cardano's Midnight or actually they're their own Midnight. They're their own coin, Midnight, or Injective. Also, I guess the coin that's fighting centralized AI fighting or the opposition to the open AI is the anthropics where a few elites control the biggest corporations ever.
11:16 I'd look for decentralized AI like Bit Tensor, like Venice Token. That is the video. My name's Austin. Like all we see tomorrow. If you made it this far in today's video, give the video a like. I would really appreciate it.