Crash of Major Crypto exchanges, what is Wrong with Them?
From the theft of assets, unreasonable liquidation to team running, numerous accidents in the blockchain industry indicate that there is nothing new in the sun, and that supervision is not in place, and the industry will continue to do so.
However, for enterprising and thinking investors, it is necessary to find out the real crux and way out of the accident by conducting an inductive analysis of each accident and lesson and improving their own judgment.
Exchange security has always been one of the most concerned issues in the blockchain industry. Almost every few months, security incidents cause shocks in most industries.
Just in early February, the exchange industry just revived from the strict supervision of the previous few months. Huobi and other exchanges have launched various marketing activities in succession. The decline in the cryptocurrency market has further exacerbated investor concerns over the security of the exchange.
The FCoin security accident was the most publicly reported accident that caused losses to investors in the past three to four years. The platform side announced that approximately 68 million to 126 million US dollars of assets could not be paid. Start anew, use the profits of individual new projects to compensate everyone for their losses, and be responsible in the end during your lifetime.
This statement sounds like a big deal, but most investors have realized that full compensation is almost impossible, and many investors have started to seek compensation through legal channels. After all, the history and lessons of Mt.Gox many years ago are only at hand, and most investors today have not received compensation.
The numerous accidents in the blockchain industry indicate that there is nothing new under the sun. The evil and greed of human nature are common in the exchange industry. However, for aggressive and thinking investors, through the inductive analysis of each accident and lesson. It is always necessary to improve one’s judgment on the platform.
Investors also need to reflect
Based on a series of reviews of exchange security incidents in this FCoin incident, it can be found that most investors have obvious error symptoms on two levels, which has caused irreversible consequences today.
First is that it is difficult for investors to curb their greed. Many investors and even institutional investors store assets and trade on the FCoin platform, partly because FCoin is free of handling fees for mainstream asset transactions and current wealth management returns with higher interest rates. If FCoin has set these two advantages, its platform in terms of asset types, it is difficult to form a strong attraction for investors, which will not lead to larger losses.
Essentially, the aforementioned psychology and behavior of investors are no different from trusting in P2P high-yield investments. They are all lost in their minds and ignoring the essentials and principles of investment because of greed for some benefits.
Second, investors’ judgments on the security of the exchange platform are still quite lacking, and even blind trust exists in reputable exchanges. Before the previous incident, FCoin caused public dissatisfaction due to conventional factors such as the plunge of the platform currency. In addition, there are few security incidents of concern, but it turns out that we cannot use the past one-sided experience to look at the problem. The absence of precedent does not mean that it will not happen.
Of course, most investors are unlikely to identify their technical capabilities in detail when they choose an exchange, but the security of the exchange is a manifestation of their comprehensive strength. Investors can pass the historical security situation of the exchange, risk control measures, comprehensive judgment of user experience, compliance and other dimensions.
Looking for a more reliable exchange
In terms of historical security, most major exchanges have experienced security incidents. For example, in May 19, Binance stole 7,000 bits from Binance’s hot wallet due to security vulnerabilities using phishing, viruses and other attack methods. The total loss reached USD 41 million. In 18 years, Binance has encountered security problems caused by hacked API interfaces. Hackers have used Binance user assets to significantly increase the prices of small currencies such as SYS and VIA to achieve the purpose of arbitrage on other exchanges.
On March 19, assets were stolen from multiple exchanges such as DragonEx, Bithumb, and Biki. Among them, DragonEx lost a total of more than $ 6 million in digital assets. The reason for the theft was that the exchange’s customer service obtained from a stranger and opened a backdoor installation package. Hackers used this backdoor to gain access to internal personnel to penetrate the internal network and successfully obtain the private key of the digital currency wallet.
Cryptocurrency exchanges are a high-incidence platform for security incidents, with frequent hacking attacks. Although the number of security incidents cannot fully represent the security of the platform, it is still very useful as an important indicator.
Today, there are a few exchanges that have not yet experienced a security incident in public reports. There are only a few exchanges such as Huobi in China, and foreign exchanges such as Coinbase and Gemini. According to Huobi official data, the total assets in Huobi Wallet have exceeded $10 billion. Data of this size indicate that mainstream investors fully trust the security of Huobi platform. Specific to Huobi’s security mechanism, Huobi has adopted various measures such as hot and cold wallet isolation, multi-signature, two-step verification, key storage mechanism, and external password review mechanism.
However, it is important to realize that there are absolutely NO secure exchanges in the market, and any project needs to adopt plans and countermeasures for potential risks.
The security accidents of well-known exchanges will cause great harm to themselves and the industry. The exchange industry needs to do its best to improve the level of security and risk control on the one hand and adhere to the bottom line and principles.
