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Bittensor’s billion-dollar dream derailed by $8m hack

Bittensor’s billion-dollar dream derailed by $8m hack
Cybercriminals have perpetrated a multi-million dollar raid on AI-focused blockchain firm Bittensor.

An estimated 32,000 TAO tokens, valued at approximately $8 million, have reportedly been stolen from the network’s validators. The situation came to light after TAO suddenly plunged 9%. According to data from CoinMarketCap, the token’s value plummeted to a low of $227, down 13% from its pre-hack price of $260. That prompted Bittensor co-founder Ala Shaabana to confirm that the chain was placed into ‘safe mode’ in an  update  on X. 

According to a further update in the project’s Telegram channel, the pause in transactions will last for at least the next 24 hours. While such interventions have proven effective in minimising losses, they also raise questions about the fundamental principles of decentralisation in cryptocurrency. Critics argue that the ability to pause or roll back a blockchain undermines its credibility and contradicts the core tenets of crypto ideology.

Additionally, this isn’t the first time Bittensor has faced such a challenge. In early June, $11.2 million worth of TAO was stolen from a large holder, with the token valued at around $400. The recurrence of such incidents has led to heightened scrutiny and concern within the Bittensor community and the broader crypto world. 

Although the Opentensor Foundation has not yet confirmed the cause of the most recent attack, ZachXBT, an independent on-chain investigator,  suspects  a potential private critical leak. The decision to pause the network mirrors similar moves made by other blockchain projects in the face of security breaches. In October 2022, BNB Chain validators paused their network in response to a $600 million hack, successfully preventing the movement of $430 million in stolen funds. 

Earlier this year, the NFT project Munchables saw $92 million returned after a rogue developer withdrew user funds, with the threat of rolling back the Blast chain likely playing a role in the resolution. 

Why is Bittensor seen as the next big thing?

Founded by Jacob Steeves in 2015 and launched in 2021, Bittensor represents a unique intersection of AI and blockchain technology. Bittensor had been riding high on the AI wave, positioning itself as a decentralised alternative to tech giants like OpenAI and Google in the AI space. The project’s unique approach, which repurposes Bitcoin-like mining mechanics for AI functions, caught the attention of prominent venture capital firms. 

Polychain Capital, Digital Currency Group, and Dao5 collectively poured hundreds of millions into TAO tokens, pushing Bittensor’s market cap to a staggering $3.7 billion. Steeves is also optimistic about his company’s prospects and, according to him, the solution that he believes will resolve what is an existential threat in A1 – the centralisation of power with a handful of tech giants. 

“It’s not the iRobot outcome; it’s the Elysium outcome,” Steeves told  Fortune , emphasising the need for decentralised AI solutions. Participants in the Bittensor network can earn TAO tokens by contributing computational power or data, a process similar to Bitcoin mining but applied to AI development.

The network is structured around 32 specialised subnets, each handling different AI-related functions such as data storage, access to AI-powered chatbots, and pricing oracles. This decentralised approach is designed to encourage continuous competition and evolution, balancing the efforts of miners and validators to maintain and develop the protocol.

The Road Ahead

Bittensor’s journey highlights the ongoing tensions in the crypto and AI communities surrounding the balance between decentralisation and security. Steeves sees Bittensor as a rival to the centralised AI tools created by major corporations such as OpenAI, Google, and Meta. He cautions against a bleak future in which powerful entities could dominate and views Bittensor’s decentralised approach as a vital stride towards achieving a more equitable technological environment.

While the recent setbacks have been a test for Bittensor, its innovation-minded approach and supportive community solidify it as a critical player in this ongoing synthesis of AI with blockchain. As the project navigates these challenges, its ability to uphold its principles of decentralisation while ensuring security will be crucial to its long-term success and credibility.

See also: Majority of US crypto investors lack understanding of blockchain technology

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The post Bittensor’s billion-dollar dream derailed by $8m hack appeared first on The Block . shares this Contents always with License.

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