From Bitcoin to Ethereum, cryptocurrencies are nursing large losses due to a massive market meltdown in the broader crypto market last week.

The meltdown was triggered by the crash of TerraUSD, one of the world's largest 'stablecoins', so-called as it's supposed to trade one-to-one with the US dollar.

After TerraUSD 'de-pegged' from the dollar, trading as low as 23 cents amid panicked selling, it caused a broader meltdown that sent cryptocurrency values plummeting.

Bitcoin – the largest cryptocurrency – fell to its lowest level since 2020 ($27,000 per Bitcoin) last Thursday, although it has since recovered to reach above $30,000.

However, market volatility is just one reason we may never be able to rely on cryptocurrencies and the system that runs them, blockchain.

Blockchains come with inherent issues – namely they require staggering amounts of energy to support, and they can be hacked, despite popular belief.

Some experts believe these issues make it unlikely that blockchains will ever become serious alternatives to banks.

Cryptocurrencies such as Bitcoin are the internet's version of money - unique pieces of digital property that can be transferred from one person to another. But this week's meltdown in the broader crypto market highlight some of its intrinsic issues compared to traditional currency. Pictured is virtual currency Bitcoin are seen in this picture illustration

Cryptocurrencies are the internet's version of money – unique pieces of digital code that can be transferred from one person to another.

All cryptocurrencies use what is known as blockchain technology – an open ledger that records transactions in code.

The blockchain allows all records of transactions to be recorded and checked, making it difficult to change, hack or cheat the system.

However, hackers can access blockchains in certain situations, leading to irretrievable money loss.


A blockchain is simply a database that is shared across a network of computers – previously likened by one New York professor to 'a glorified spreadsheet'.

As each transaction between two people occurs on the blockchain, it is recorded as a 'block' of data, including information such as the sender, the receiver and the number of coins.

Computers in the network, called 'nodes', check the details of the trade to make sure it is valid and authenticate transactions.

Blockchains have had a reputation for being 'unhackable' – but this is not actually the case.

Blockchain networks rely on 'miners' – software users who solve transaction-related algorithms to check and authenticate transactions.

If these miners have nefarious intentions – or 'go bad' – then they are in a powerful position to attack the blockchain network.

Blockchain attacks have a range of colourful names, such as 'Goldfinger attack', 'Sybil attack' and '51% attack'.

'A 51% attack is an attack on a blockchain network where one group of miners own more than 50 per cent of the network's computing power,' Marcus Sotiriou, an analyst at GlobalBlock, told MailOnline.

'This would be costly because the attackers would be able to now reject unwanted transactions or double-spend coins – the risk that a cryptocurrency is used twice or more.'

A high profile 51% attack occurred in 2019, when criminals gained control of the blockchain of Ethereum Classic.

Access was used to rewrite the chain's transaction history, leading to around $1.1 million worth of the currency being stolen from other users.

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