Why Solana (SOL) Hack Has Also Impacted Others Coins

To understand why technical issues of one blockchain can impact other cryptocurrencies, we should take a closer look at each specific case. This time, let’s review the impact of the Solana hack.

Introduction to Solana

So, Solana (SOL) is a fast-developing blockchain-based network that runs on the proof-of-history consensus mechanism. This ecosystem is often considered one of the most successful competitors of Ethereum. Solana and Cardano are called Ethereum-killers. How do they compare with each other? Read in this guide.

Solana has gained this reputation because of its fast execution and sequencing of validators. This network is able to process 50,000 transactions per second. Combined with low transaction and gas fees, the high speed of execution makes the Solana network one of the most efficient blockchains in the industry. This is also the reason why many developers prefer to build their dApps on this blockchain.

The boom of NFT has also attracted a lot of users to Solana. It turned out to be one of the best platforms to create NFTs and specific marketplaces for buying and selling non-fungible tokens. SolSea and Magic Eden marketplaces, for example, run on the Solana blockchain.

How can cryptocurrencies be hacked?

Blockchain is often referred to as the safest financial technology. Indeed, a blockchain is very secure because it’s a decentralized ecosystem where every transaction is recorded in blocks that store the data forever. Also, any transaction must be validated by decentralized computing powers. However, this doesn’t mean that there’s no way to hack such a network.

The most common way to hack a blockchain is called a 51% attack. This approach sounds quite simple – attackers need to gain control over the majority of computing powers that validate transactions within the ecosystem. This method is especially efficient against small networks with a poor level of decentralization. If a 51% attack is successful, frauds can simply transfer the coins to their anonymous addresses. 

Such attacks might be worth millions of dollars. The biggest cryptocurrency hack ever happened on the Poly Network on August 2021. The total losses caused by that attack amounted to $611 million.

What’s happened to Solana?

Recently, the hack of the Mango Markets was reported. This is a cryptocurrency trading platform that runs on the Solana blockchain. The total loss caused by the attack amounted to around $117 million. This news caused sales of the Solana coin, which made the SOL price drop from $31.5 to $28.3 and accelerated further declining movements, causing SOL to fall to its monthly lowest point of $27.2.

This isn’t the first hack of Solana in recent months. On the 3rd of August, attackers targeted Solana-based wallets. The Phantom hot wallet was their major target but in total, this attack impacted around 7,000 wallets. This attack led to $8 million in losses.

What was the impact of the recent Solana attack?

The recent hack of the Solana-based trading platform made SOL the biggest loser of that week among the top 10 cryptocurrencies. What’s interesting, this coin isn’t the only one that has been impacted by that attack.

News about blockchain hacks always increases the level of uncertainty and concerns among crypto users. This one wasn’t an exception. Solana’s security issues triggered sell-offs of other top cryptocurrencies, including Cardano (ADA). Although all these coins have already recovered from that losses, this hacking attempt accelerated bearish tendencies in the market for a short period.

Conclusion

You should keep in mind that there will always be attempts to hack blockchains and violate your funds. Even if this doesn’t impact your privacy and funds security directly, you can lose money as an investor. That’s why when buying cryptocurrencies, you should make deep research on the blockchains they run on and analyze their potential security issues. Security and reliability of the crypto project must be the top criteria for you.