The Element Zero TestNet shows life beyond the hot wallet. The cryptocurrency industry had (fortunately) managed to avoid making news with regards to crypto hacks taking place at major exchanges for an impressive amount of time, allowing both coins/tokens and many exchanges to go unphased by the bad press and the unfortunate loss of funds that frequently plagued popular assets such as Bitcoin years prior. (To fully put this into perspective, there are still ongoing developments about the major Mt. Gox hack that took place in 2014 and significantly decreased the growing value of BTC at the time.)
In recent news, however, we have noticed that the threat of hackers looming over exchanges and awaiting their opportunity to strike has still not gone away. The Binance hack that took place this month serves as a reminder that Bitcoin, and most other cryptocurrencies, are not a safe digital store of value due to the fact that they are still vulnerable to being broken into. In the case of the Binance hack, hackers managed to get their hands on two-factor authentication codes, API codes, and other pieces of information that allowed them to whisk away the 7,000 Bitcoins (approximately $40 million at the time of writing) that were stolen from the platform.
Despite the fact that the platform has managed to recover with ease and isn’t overall too affected by the hack, this type of news continues to erode the overall peace of mind of the crypto community who store any type of crypto assets in an exchange as a means to have easy access to it when they want to engage in trading.
The biggest issue with these exchange platforms is that they don’t have the airtight security needed to protect user funds. Exchanges still have to use hot wallet technology in order to store the bulk of their funds. While they may adhere to modern security measures that protect their users to a certain degree, there is always opportunity for dishonest actors to find ways to access these funds, making it near impossible for scalability or mass adoption to become a reality. Although they have implemented safer methods such as cold wallets to better protect funds, these methods don’t truly solve the issues at hand.
The question then becomes, what are some solutions to this process? How can we better repair the current model so that these issues do not come up and allow room for growth within the crypto and blockchain industry? Well, we need true P2P alternatives to exchanges in order to keep user funds safe, to ignite growth, and to move forward.
The answer to this question may very well be the Element Zero Network.
With Element Zero, there is no underlying security issue to using the EZO coin as it is not stored in a hot wallet like Bitcoin or other cryptocurrencies. It cannot be stolen in the same way that many of these other vulnerable assets can. Instead, EZO is locked in a smart contract rather than sitting in a wallet that can be hacked into. One must meet the guidelines set forth by the two parties stated in the smart contract before funds are able to go through a transaction.
To give you a better idea of how this works, think about the different examples above. A hot wallet is similar to a house, a cold wallet is similar to a safe, and an Element Zero smart contract is similar to a trustee. If you want to get a hold of EZO, you need to have something available for trade in order to receive those funds and what you are trading must have the same face value. Say, for example, that you are looking to acquire 10 EZO coins. You can’t just hack the system and take them. You have to go through the process of exchanging an equal or greater amount (the Element Zero platform will give refunds where necessary if the traded amount is greater than the amount agreed upon) in order to have those funds released to you. Overall, there is no way around the system as you must meet the conditions of the smart contract in order to receive funds. This system solves the many issues presented by hot wallets and provides a higher level of security. You can learn more about how this process works firsthand at the recently launched TestNet page.
In addition to the fact that Element Zero eliminates the potential for funds to be stolen, there is also the added bonus of the project providing the user with a stable asset that doesn’t experience the volatility that plagues many of the coins and tokens found in today’s market. Element Zero uses a series of algorithms and protocols that keeps the stablecoin at a designated price, shields the user from major problems like inflation, and helps to maintain the token so that it is allowed to persevere through some of the demand and supply issues that can change the nature of stablecoins. With an asset that can successfully navigate the dangers of hackers and maintain a consistently stable price, we are now able to have a true store of value that can perform the mission that Bitcoin was created for: providing the world with a safe, digital currency that can become a global phenomenon.
To put it simply, users shouldn’t have to deal with the possibility of having their funds taken from them when they are storing them in a popular exchange or, more importantly, a hot wallet in general. We need to create a world where users can enjoy the freedom that comes with their digital assets while simultaneously allowing them to feel at ease knowing that their assets are safe from hackers. In this vision, we can easily see Element Zero acting as this driving force of change and we believe that many others can see this too.