Crypto exchange hack incidents are on an alarming rise of late. The frequent hacking mishaps have left a lot of crypto traders stranded and many new traders are still in a dilemma to join the crypto world. Here are some stats on crypto exchange in recent times:
· 2017 December- Hackers stole around 63 million USD cryptocoins from NiceHash
· 2018 January- Over 500 million USD in crypto stolen from Coincheck
· 2018 February- 195 million USD in crypto stolen from BitGrail
· 2018 June- 30 million USD in crypto stolen from Bithumb
The shocking truth is that Bithumb has been hacked again in 2019 and with this hack, the total stolen amount from crypto exchanges has crossed 1.3 billion USD.
Such unfortunate incidents bring us to the question that why are crypto exchanges being hacked. The crypto market is on rise and so is the popularity of Bitcoin or other cryptocoins. The booming crypto market is pulling in lots of aspiring traders to the table.
Crypto exchanges naturally want to tap into the rising market and are rushing up with their exchange portals. They are under the self-created pressure to bring up an exchange before crypto traders as fast as possible. But many of them don’t have the required capital to create a proper exchange with advanced security measures. However, they also don’t have the patience to wait and gather that required amount of capital. The end-result is a list of multiple rushed-up exchanges that have not bothered to invest time in implementing powerful security to bypass hackers.
“One of the main problems with many crypto exchanges is that they store their funds on hot wallets. These are online wallets which are connected to internet. As a result, these hot wallets can be accessed easily by cyber hackers”, stated Sydney Ifergan, crypto expert and the Advisor of Decoin crypto exchange.
It’s true that some exchanges claim to take up security measures to protect the hot wallets yet these measures too can’t eliminate risks of hacks completely. Online hackers are always on the spree of developing new kinds of malware which seem to be more advanced than existing security in hot wallets.
To ensure optimum security and bypass hackers effectively, more than 95% of the exchange’s assets should be in cold wallet. Cold wallets are never connected to internet. The Decoin exchange stores 97% of its crypto assets in cold wallet.