No matter the strength of your password or the number of unique combinations it consists of, if a Bitcoin exchange gets hacked, it will not be able to protect your assets. If a hacker targets a crypto exchange, he doesn’t usually go for the wallets that are on the platform; he goes straight for the exchange. When a breach in security happens, even crypto regulations would not be able to help investors if their assets are on the exchange platform.
Most crypto exchange outfits have been subject to data breaches at one point or the other, with the hackers leaving devastating effects on the wake of data attack. However, even though most crypto regulations are not answering the questions raised on its efficacy, previous case studies might help explain better how the issue can be tackled.
The hack of Mt. Gox
This hack that happened in 2011 will go down as one of the most prominent that occurred in the crypto exchange world. The hacker carted away nothing less than 2,600 Bitcoins after he used the details of an Mt. Gox auditor to gain entry into the database.
The exchange outfit was able to continue operations over three years while recovering about 70% of lost bitcoins only to figure out that the hacker was stealthily stealing the digital currency little by little. After the company recovered about 200,000 bitcoins, it was further dragged into another mess when then CEO was discovered to have deliberately touched up financial records so the hack wouldn’t get to the press.
The typical example of Mt. Gox would push one to wonder if things would have taken a rather good turn for the exchange if there were stricter crypto regulations. However, most crypto exchanges that are springing up are more security conscious and have more stringent measures put in place to secure their assets.
Do United States crypto exchanges have better database security?
While The United States cryptocurrency exchanges have been able to do well in terms of security of their assets, exchanges in Asia are doing a terrible job where security is concerned. Technology is rapidly at a fast-moving pace, and the USA is leaving no stones unturned in terms of database security, but they have once been a victim of the said breach.
Far back as 2014, a United States exchange firm lost about 97 bitcoins to hackers. Even though they were quick to return funds, they also learned from their past mistakes and have tightened security on the platform. Crypto regulations have addressed most crypto hacks but as soon as the laws are reviewed, things might get better.