How Secure Is a Smart Contract When Using Crypto Payments?

by 99Crypto

Until recently, cryptocurrency traders who focus on altcoins more than on major tokens such as Bitcoin and Ethereum were pretty excited with the arrival of non-fungible tokens such as Axie Infinity, which gave them opportunities to profit from speculation. Over the last few weeks, however, there has been a noticeable shift towards decentralized finance tokens, and there are various reasons that explain this shift. In essence, switching tokens means investing in different blockchains, which brings about the following questions:

How secure are smart contract transactions in particular?

When a project launches, people often assume the developers are creating a great project. That’s a reasonable assumption, but they also need to understand the code to make sure they’re not leaving their keys in a bad place, so to speak.

This is an issue on Ethereum, where users can store tokens and create “dapps” (decentralized apps), but this is not the most efficient way to store and access them.

The Ethereum community is currently in a transition phase between the proof-of-stake consensus model of Ethereum Classic (ETC) and proof-of-work consensus model of Ethereum (ETH). Some project owners have decided to move over to the other network, and the new Proof of Authority (POA) model allows users to control the blockchain, while the Proof of Authority (PoA) consensus allows developers to develop more quickly. This is an example of an Ethereum blockchain network being “forked” into a different chain, and how the Ethereum community will move forward. The best way to ensure a blockchain network stays decentralized is through community governance, which is what the London Ethereum project attempted, but the network is functioning better through the implementation of DeFi exchanges.

How secure are these decentralized exchanges?

Ethereum (ETH) has a lot of experience with decentralized exchange markets. There have been many different DEXs across various different projects, ranging from simple marketplaces where users can trade with each other on the platform, to smart contracts that act as traditional exchanges, to the future of blockchain 2.0 marketplaces.

The latter have proven a bit too ambitious, but some projects have managed to launch their own decentralized platforms for trading. A good example is OpenSea, the NFT marketplace built on Ethereum.