The cyber world is shaken to its core, at least for a large number of Internet users that do Bitcoin exchange. Hackers once again infiltrated what should be a secure authentication system that protects transactions for Bitcoin. Earlier in August 2016, the cyber thieves stole approximately $65 million worth of virtual currency. This is the second largest cyber theft after a Tokyo-based exchange hack costs $350 million in 2014. Cryptocurrencies are hot targets or cyber criminals since the dawn of its existence in the virtual world.
There is a continuous rising concern among Bitcoin holders as the third trading platform of the company also fell prey to hackers. Newly disclosed data also show that roughly half of these trading platforms have officially closed in the last 6 six years. One of the many concerns among Bitcoin exchangers is that there is no depositor’s insurance that would absorb the loss. This is the unfortunate truth despite the fact that Bitcoin exchanges are like virtual banks in nature.
The cyber security risk for Bitcoin continues. In fact, investors are left with minimal choice in transacting with under-capitalized exchanges and still risk uninsured deals.
Investors that lost a few thousand dollars in the hack only have the consolation that there are other traders out there that lost millions.
This is one of the biggest differences between virtual currency exchange and regulated banks or exchanges. The centralized repository of any Bitcoin community seems to be always at risk.
According to cyber experts, there are no pending technological silver bullets that are geared to solve the Bitcoin security breach issues.
The digital world is not fully equipped with the technology, financial mechanism, and cryptocurrency that protect Bitcoin investors from hacks. Thus, this virtual currency exchange will continue to be vulnerable in the years to come.
According to information from the US Department of Homeland Security, 33% of all Bitcoin exchanges from 2009 to March 2015 were hacked. In contrast, only 1% of regulated bank transactions and operations from the same timeframe have been reportedly affected. Security breaches are at a higher rate with cash flows in these particular trading venues. More than half of virtual currency operations in the past 3 years have also experienced cyber attack, according to the World Federation of Exchanges and International Organization of Securities Commissions.
The Internet community’s continuous concern is on the issue if the lost or hacked virtual currencies could be reimbursed to their members. In the most recent hack, Bitcoin holders lost 36% of their assets in the platform. The compensation is in the form of tokens of credit that are convertible to equity in the main company. Regardless of the compensation, experts confirm that trading venues will continue to be big targets for Internet hackers.