On Wednesday, Paxos mistakenly minted $300 trillion worth of PYUSD. While concerning, this also serves as a case demonstrating the advantages of blockchain over traditional banking.
On Wednesday, Paxos erroneously minted $300 trillion worth of PayPal's stablecoin (PYUSD) due to an "internal technical error."
It is noteworthy that blockchain allows errors to be quickly identified and corrected in a timely manner.
The incident occurred on October 15 at 19:12 (UTC), and the entire amount was destroyed just 22 minutes later, with external observers able to notice it almost immediately.
Traditional banking, however, cannot achieve this.
According to Cointelegraph, Kate Cooper, CEO of OKX Australia, stated, "Every financial system makes mistakes — but the difference with blockchain is that these mistakes are visible, traceable, and can be quickly corrected." She added, "This transparency is an advantage, not a flaw."
Cooper, who served as an executive at Australia's two largest banks for nearly a decade before transitioning to the crypto industry, believes the Paxos incident highlights the openness and transparency of blockchain. These characteristics are driving the transformation of financial regulation.
According to Cointelegraph, Ryne Saxe, CEO of Eco, remarked, "In the irreversible development process of on-chain stablecoin economics, the transparency advantage required by currency issuers is often overlooked. While this incident is extreme, it is enlightening."
In April 2024, Citigroup mistakenly transferred $81 trillion into a customer account, which was supposed to be $281, and it took hours to retract. The media reported it nearly 10 months later.
In the same month, another Citigroup employee pasted a customer account number into the payment amount field, nearly resulting in a $6 billion transfer to a wealth client. This incident was also disclosed 10 months later.
In 2015, Deutsche Bank mistakenly transferred €28 billion ($32.66 billion) to a partner.
The above cases are just a few publicly reported examples; similar incidents are not uncommon in the banking industry.
However, this incident shows that stablecoin companies need to further improve their operational control and risk management regarding token issuance. Shahar Madar, Vice President of Security and Trust Products at Fireblocks, stated in an interview with Cointelegraph:
"Minting $300 trillion is an avoidable mistake. As the usage of stablecoins continues to rise, issuers must ensure that security strategies cover the entire token lifecycle."
Shahar Madar further added in the Cointelegraph interview, "Operations such as minting, transferring, and destroying are highly sensitive and should not rely solely on 'soft' processes or manual checks."
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