Seven years on from the great 2011 Bitcoin theft, the world of crypto exchange is undergoing a stunning transformation.
The news that those who had Bitcoin stolen in the notorious Mt Gox theft of 2011 has been welcomed by everyone involved in digital currencies.
Revisiting the story serves to remind all of us of the progress crypto exchanges have made in a relatively short period but also the steps that still need to be taken.
In 2011, Mt Gox was riding high and dominating Bitcoin trading, accounting for roughly 70% transactions. It turned out to be a sitting duck – a poorly protected centralised exchange that was always going to be subject to a well-organised attack.
Thankfully, we now have better protected centralised exchanges. Even more excitingly,  a new breed of decentralised exchange is emerging, offering a whole new level of security and convenience.
From exchange central to de-central
The sheer number of centralised exchanges in existence nowadays means that a cyber attack with such seismic repercussions for the industry isn’t likely. But, unfortunately, attacks are still going to happen because centralised exchanges are inherently vulnerable.
When individuals pass over custody of their funds to a centralised exchange in order to trade, their private keys become vulnerable to hackers. And unlike bank funds – which enjoy protection from governments – centralised exchange won’t always be able to refund attack victims.
Centralised exchanges can also abuse power. They can reduce withdrawal limits without warning, while their unscheduled downtime can prevent users from accessing their funds. The sudden delisting of coins is also a risk, resulting in profit loss in some cases.
Whilst the best centralised exchanges have contributed immensely to the ecosystem from a usability and trust perspective, hacks of any centralised exchange ruin the reputation of the crypto space and the value of cryptocurrencies in general.
De-centralised progress

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