In 2015, Bitstamp, a popular crypto exchange encountered a hack and incurred losses upwards of 19,000 BTC, a crypto-equivalent of USD 1 million! In 2016, another crypto exchange, Bitfinex, widely known for its multi-signature technology, suffered a hack which resulted in losses close to 120,000 BTC. More recently, CoinSecure exchange experienced a similar attack wherein the perpetrators managed to steal 438 BTC from the customer’s exchange-aligned wallets.
Do you know what is common between all these instances?
They all occurred on Centralized Exchanges (CEXs), an entity similar to a bank which serves as an intermediary for transactions, maintaining crypto balances and facilitating transfers through its one central unit.
While there’s a lot that deserves credit and applauding when speaking about CEXs, rampant instances of security breach have caused crypto traders to demand better of the ecosystem. More and more crypto transactors are flocking to the simpler ways of the decentralized exchanges (DEXs), even if it’s for small trades, for the sake of secure transactions, enhanced trust and a pure play peer-to-peer ecosystem where there’s very little room for failure as well as monetary loss.