Did Bitfinex Security Breach Prompt Bitcoin Dip, Expose the Digital Currency’s Vulnerabilities?
Bitcoin, the digital currency, took a dip on Wednesday following the hacking of Bitfinex, which is a Hong Kong-based exchange. During the hacking, funds were stolen.
In reaction to the event, the exchange has been paused. Also, withdrawals and deposits are being investigated. Consequently, Bitcoin’s trading value plummeted about 20 percent during early hours in Hong Kong, according to the New York Times. However, by early afternoon, it had recovered about half of its loss. Director of Community and Product Development Zane Tackett didn’t respond to NYTimes request for a comment, but he did indicate via a Reddit post that 119,756 Bitcoins had been stolen.
Prior to the public announcement about the hacking, the loss was was equivalent to $72 million. That loss has lessened, bringing the figure closer to a still astounding $65 million. The Hong Kong exchange, which is one of the world’s largest, said the following in a blog post, ““As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach.” Additionally, Bitfinex indicated that any customer’s losses would be investigated and acknowledged in the future.
The viability of Bitcoin has been questioned thanks to security breaches such as this one. Just two years ago, in 2014, Mt. Gox, an exchange based in Tokyo, was targeted. Hundreds of thousands of Bitcoins were stolen in a heist that still has law enforcement officials and experts baffled. More than $50 million worth of Ether, another form of digital currency was nabbed by a hacker during June of this year. The funds were taken from the Decentralized Autonomous Organization experimental virtual currency project.
While some exchanges may be shaken by these recent events, others are unruffled. Chief strategy officer at the large digital currency exchange OKCoin, Jack Liu, indicated he wasn’t concerned about his company’s security because he’s using a different system. He believes there should more conversations launched about best practices. If hackers are getting better and adapting that isn’t safe for the industry overall.
The Bitcoin community views the digital currency as the future of finance, ensuring faster and transactions, but there’s internalized competition and debates surrounding technology that could potentially permit vulnerability. Part of the coding that underlies the currency is known as the blockchain ledger, and it’s gaining traction as banks see the benefit of using technology to speed up trade. Nonetheless, they all exchange and trade to be secure.
Originally published at davidemickey.net.