Cryptocurrencies are a much-debated subject in the world right now. A lot of countries are grappling with the question of whether to allow cryptocurrencies into their economic systems or not.
One of the major issues standing in the way of cryptocurrency acceptance is the lack of tools to keep a check on fraud and manipulation concerning cryptocurrencies. It is not cryptocurrency currency projects which are turning out to be scams, but the infrastructure which supports cryptocurrencies, that is cryptocurrency exchanges, is also not adequately equipped with robust security features to protect investors.
Cryptocurrency exchanges being hacked is not an uncommon event. According to Blockchain security firm CipherTrace, $731 million worth of cryptocurrencies were stolen from crypto exchanges in the first half of 2018 alone. Among the most notorious cryptocurrency hacks of 2018 were the $500 million Coincheck hack in Japan and the $40 million Coinrail hack in South Korea. Both the exchanges had stored a huge amount of digital assets in hot wallets connected to the internet instead of offline cold wallets. Another South Korean exchange, Bithumb lost digital assets worth $30 million to hackers when they found a bug in the exchange’s software upgrade and exploited it. In another event, hackers stole Nano worth $200 million from the cryptocurrency exchange BitGrail.
The most recent cryptocurrency exchange which has been highlighted in the cryptosphere and outside it is the one on cryptocurrency exchanges in Brazil. According to Digital Investment, a YouTube channel, several exchanges were hacked recently resulting in crucial data of more than 264,000 users getting exposed. Among the most severely affected exchanges was the Atlas Brazilian Exchange where data of more than 15,000 users was compromised.
Thus, it can’t be denied that security is the weak link of cryptocurrency exchanges. Many exchanges make the most basic errors still such as allowing simplistic passwords for accounts, not using 2FA authentication and underusing HTTP security headers. Such mistakes can be easily avoided for ensuring stronger security. Moreover, all exchanges should undergo a thorough security audit before their launch, so that in bugs in them can be found and fixed in time. Exchanges also need to keep upgrading their security measures regularly, as hackers are always developing new ways of breaking in into systems.
A greater emphasis on security can help fortify exchanges against attacks. When attacks and cases of fraud and manipulation are reduced, it will be easier for cryptocurrency advocates to convince governmental authorities about the pros of cryptocurrencies. With the support of their governments, new users will be able to embrace cryptocurrencies with more confidence. Thus, robust security practices by exchanges can help contribute to wider adoption of cryptocurrencies, which is why they should be a priority, and not an option.