The cryptocurrency market is currently worth about $350 billion USD. In comparison to more traditional markets, this doesn’t look like much. Gold, for example, which experts commonly compare Bitcoin to, is worth close to $8 trillion USD.
However, this is only one perspective. A different perspective is the fact that over $1.5B in investor funds have been stolen from various exchanges over the course of the past 10 years.
That is a lot of money, and it is a problem that isn’t going away. In fact, as cryptocurrency exchange technology advances, so do hacking techniques and tricks.
Mt. Gox: A Mistake We Didn’t Learn From
It all began with Mt. Gox. Operational between 2010 and 2014, at its peak, Mt. Gox handled at least 70 percent of Bitcoin transactions.
The fact that the Mt. Gox site was originally intended to trade Magic: The Gathering cards online should perhaps have been writing on the wall to the cryptocurrency community. Unfortunately, it wasn’t.
After a series of security breaches, suspicious activity, and unexplained system glitches, withdrawals from Mt. Gox were suspended indefinitely in February 2104. Shortly thereafter, the exchange announced that over 850,000 bitcoins were unaccounted for.
At the time, this number represented more than six percent of all bitcoins in existence. The entire market reacted in kind, with Bitcoin losing 20 percent of its value. While only 24,000 investors held funds that were directly affected, the entire situation sent investors all over the world into a tailspin.
Mt. Gox filed for bankruptcy shortly thereafter. However, the damage was done and is ongoing. To this day, the case is entrenched in legalities and conflict. Creditors have yet to see a dime of their losses recouped.
QuadrigaCX: Tragedy or Scandal?
The last major cryptocurrency attack of 2018 wasn’t really even a hack. It was more a personal tragedy, plagued by rumors and potential scandal, that also happened to result in the loss of $190 million in investor assets.
When QuadridaCX CEO Gerald Cotton passed away suddenly from Crohn’s disease in December 2018, the cryptocurrency world was shocked. As always when a young person passes away, it was an unexpected and devastating loss.
The loss was unfortunately magnified by the fact that for the past eight months, no-one, including Cotten’s sole heir, his wife Jennifer Robertson, have been unable to access funds they had in Quadriga. Cotton held the passwords to Quadriga’s digital wallets. His encrypted laptop has proven impenetrable.
Additionally, multiple shady coincidences surround the whole sorry mess. Enough unanswered questions exist that rumors of scam and exit strategies abound.
Binance: Dark Horse Hackers
If there was one exchange nobody expected to become a hacking victim, it was Binance. After bursting onto the cryptocurrency scene in summer 2017, Binance quickly became an industry leader in security, versatility, and sheer trading volume.
In May, the exchange suffered a $40M hack. Representing approximately two percent of it’s bitcoin holdings, Binance had the back-up funds to cover a loss of this volume.
However, the resultant effects on the cryptocurrency community were immediate and powerful. If even Binance wasn’t safe from hackers, where are digital assets safe?
The Future: Bright or Bleak?
2019 has seen a flood of new exchange launches hitting the market. Most of them boast the standard security features now available through most crypto exchanges.
However, it has become very easy to launch a cryptocurrency exchange. Additionally, it is a profitable proposition. This has led to a lot of opportunistic exchange activity.
For this reason, selecting a reputable, solid platform is imperative. Some new exchanges do have a commitment to security and best of breed service offerings.
One of the more recently released exchanges, ecxx, is committed to secure and trusted digital asset protection. The ecxx exchange boasts multi-layer security, designed to meet the needs of professional and retail investors alike.
Ecxx states a vision that includes becoming the world’s leading digital asset exchange. This means bigger than Coinbase, Binance, or Kraken. This also means they are in it for the long haul.
As digital asset exchanges advance, becoming more user-friendly and interactive, it is a positive thing and perhaps this means that exchanges these days seems to be learning from the past mistakes of the past giant ones as ecxx built a platform dedicated to security and trust.