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delves into the background of centralized and decentralized cryptocurrency exchanges.
As decentralization is our name for the game, we would primarily like to find out whether it was inevitable or not.
From Childhood to the Golden Age: DCEs and CEXs
The first centralized cryptocurrency exchanges had two main pre-historical roots of origin. Ideologically, they originated from the e-commerce exchange services of the early 2000s. Digital Currency Exchanges, or DCEs, were particularly popular in the U.S. and Australia. GoldAge Inc., E-Gold Inc., Liberty Reserve were frequently seen in the headlines mostly due to legal issues, as the U.S. SEC, as well as the Australian ASIC failed many times over to figure out whether the e-gold exchange was a form of banking, money laundering, non-licensed remittances or illegal entrepreneurship. These services exchanged fiat money on different digital currencies (1MDC, E-Gold, eCache etc.) and, in a way, fulfilled the demand of New World and EU citizens for anonymous transactions of digital and fiat money.
But, in fact, the first significant cryptocurrency exchange arose from a surprising source… The website of the online game “Magic: The Gathering Online”. This game’s name refers to a magical world, where the currency system is represented in the form of cards. Jed McCaleb, the programmer from San Francisco and future contributor for Ripple and Stellar, developed the Mt.Gox project with the purpose of trading these cards like traditional stocks. In January 2007, he purchased the domain name mtgox.com, but in 2008, he abandoned the project as a premature venture. One year later, he used this domain to advertise his own online game. In the year of 2010, he read about the concept of Bitcoin and decided to launch the Mt.Gox exchange and exchange rate service allowing to trade Bitcoin freely. The project was released on July 18, 2010.
Rapid commercial growth started when the product was sold to the French-Japanese developer Mark Karpeles in January 2011. It was the year 2011 when Mt.Gox demonstrated the main security challenges that traditional centralized exchanges will encounter all along their development path in the future. These included direct thefts from the platform’s wallets, attacks with multiple ‘ask’ orders, malefactor invasions resulting in price drops (one day, in the spring of 2011, 1 BTC was worth less than 0.01 USD) etc. By the way, the dramatic collapse of February 2014, with more than 750K BTC lost and the $65M civil suit in Tokyo court were still to come. During the years 2012–2013, every 3 of 4 Bitcoins in the world was sold via Mt.Gox, and it was a real success story.
The years 2011–2012 gave birth to the bulk of top centralized cryptocurrency exchanges. BTCC was founded in June 2011 as the first exchange for the Chinese market. At the same time, American developer Jesse Powell had spent a month visiting Mt.Gox offices to offer assistance in the aftermath of the first hack. He was unsatisfied with the level of business organization, and that was how Kraken was founded in July 2011. The infamous BTC-e platform for exchanging rubles for BTC was also launched in July 2011. In late 2011, the largest American exchange BitInstant was founded and started selling Bitcoin via WalMart and Walgreen. 2012 became the year of origin for Bitfinex, Coinbase (first Ethereum marketplace) and LocalBitcoins.
Pros and Cons of Centralized Exchanges
We are now six or seven years away of those days. Today, hundreds of centralized exchanges are offering the services of exchanging BTC, ERC-20 and another cryptos. We can even hardly classify them. Usually, specialists speak about three mainstream types of centralized exchanges. Trading platforms.
They connect buyers and sellers to each other, allowing them to publish trading orders and take some transactional fees (most commonly 0,3 per cent from the taker of the liquidity). For example, Cex.io, BitFinex, BitStamp belong to this group. Usually, these platforms are characterized by a complicated interface, which is not suitable for newbies. Cryptocurrency brokers.
If a trading platform is a local market where you buy goods from their producers, the broker is a small player on the market. They sell coins at definite prices while setting high fees, but allow acquiring cryptos in a simpler manner. Moreover, most of them support a broad range of payment tools. Coinbase, Coinmama, Coinhouse are among the most popular brokers. Peer-to-peer-services.
They simply allow their users to publish announcements about operations with cryptos. The buyer and the seller directly negotiate the prices. It is even possible to find one selling crypto for cash in your neighborhood. The most remarkable example here is LocalBitcoins.
As one can see, now the range of services offered is truly broad. By the way, there is a list of common complaints regarding centralized exchanges both from traders and crypto theoreticians. Safety.
Even a single point of centralization can lead to the massive theft of users’ funds and keys. More than a million BTCs have been stolen by the time of writing of this article. Regulation.
If the center (or even one of the centers) of a CEX is physically located in some country, the position of this country’s government on ICOs and crypto related issues becomes crucial for the future of the project. Legal restrictions in this sector are now imposed in the U.S., China, South Korea, India etc. When your exchange is centralized, the officials can arrest your cryptos for no reason. Moreover, the administration of the exchange can be involved in fraud with your private information and money. Speed.
We have conducted some particular research on the speed of popular CEXs (Binance, Huobi, Poloniex, see p. 11). The results are sad: you can wait dozens of minutes waiting for the pending of your transaction. KYC/AML.
There is nothing to talk about in this regard, we suppose. If you must send someone your photo, a scanned copy of your ID or even proof of income wanting nothing in return but to withdraw your own funds, it is not OK.
Decentralization: The Solution
Decentralization, as the initial meaning and internal essence of blockchain, smart-contracts and cryptocurrencies, was first italicized by Satoshi Nakamoto and even Nick Szabo in 1990–2000-s. The rise of CEXs resulted in an obvious contradiction, because blockchain-based currencies are being operated via centralized mechanisms just like Visa or MasterCard, but much slowly. Is it normal? Where is the next stage of evolution or, does it even exist in the first place?
The answer was the main point of arguments in the crypto community during the year of 2017. In February, Vitalik came out with the suggestion about the nature of blockchain’s decentralization: “Blockchains are politically decentralized (no one controls them) and architecturally decentralized (no infrastructural central point of failure), but they are logically centralized (there is one commonly agreed state and the system behaves like a single computer)”.
The only possible expression in the commercial implementation of ‘architectural decentralization’ is the decentralized exchange of cryptocurrencies.
And the most advanced technology in this case is that of the Atomic Swaps
— the direct peer-to-peer instant cross-chain transaction.
CEXs were the natural and inevitable stage of development for cryptocurrency exchanges. By the way, the DEXs are coming: we found them (namely IDEX, EtherDelta and Waves DEX
) on the list of the top-100 exchanges on Coinmarketcap.
So, the Swap.Online team is on the right track. Get ready for ERC-20 ⇔ BTC, ETH ⇔ BTC, USDT
⇔ BTC, EOS ⇔ BTC trading directly from your browser with neither middlemen nor a centralized infrastructure.
See you on the mainnet on August 27, 2018,
- Introduction Binance is an exchange company formed in 2017. If one may ask, is Binance just an exchange or a progressive crypto exchange? My answer is that Binance is not just a crypto exchange company but an 'engine' that drives crypto-currency adoption. How? My readers may ask. My answers will first start with a simple analogy of what is adoption.
Adoption is a process whereby a person assumes the parenting of another, (usually a child, from that person's biological or legal parent or parents,) and in so doing, permanently transfers all rights and responsibilities, along with filiation, from the biological parent or parents (Wikipedia,2018). In the sense of crypto-currency it is a process whereby a person assumes the parenting of another ( new idea or way or thing) and in so doing permanently transfers all rights and responsibility that belong to the old or normal way to the new way. Driving in the other hand is knowing how to operate the mechanisms which control the system (vehicle); it requires knowing how to apply the rules of the road (which ensures safe and efficient sharing with other users). An effective driver also has an intuitive understanding of the basics of system (vehicle ) handling and can drive responsibly (Jacob,2018). A driver may be a person, company, a system or device that knows the mechanism which control a system and the driver must formulate or know the rules and the basics of directing the system to its target. A device driver for instance is a system (computer program) that operates or controls a particular type of device (EMC,2010). In our case we are looking at crypto-adoption driver, a person or company that knows the mechanism which can be used to make greater number of people to transfer permanently the rights and responsibility of fiat money to blockchain currency (Crypto-currency).
A clear case of driving adoption can be easily seen in Football which have been in existence long ago, but FIFA devices a way to entice all nation to participate and develop football infrastructure in there countries by moving Football tournament hosting around different regions and other things they did to make the sports to be popular (adopted) all over the regions of the world.
Similarly, crypto-currency have been there before Binance started, crypto-exchanges have been there before the advent of Binance but what Binance did and what they did not do helped in replicating adoption across all the regions of the globe. The only challenge here is whether these position can be substantiated?
- The Authors experience My name is Bartholomew Eke (PhD), a Software Engineer and Senior Lecturer at the University of Port Harcourt, Nigeria, Africa. I developed interest on cryptocurrency in 2010 after reading Nakamoto published paper Bitcoin: A Peer-to-Peer electronic cash system (Satoshi,2008) which I saw as a research on cryptography protection of online payments. I didn't well understood it until on Febuary 2014 on hearing that Mt. Gox the largest Bitcoin exchange tend, had gone bankcrupt and had made away with depositors 'Coins'. The word coins attracted my interest, I wondererd why they should be keeping the Coins instead of the notes, but I latter learnt it was not Coins but Bitcoins. Before that time Satoshis's Bitcoin was simply viewed by me as a research exercise aimed at improving crryptography which I had many programs on. The research on tracking of Mt. Gox Bitcoin in the publication of Sarah et. al (2016) increased my interest in Crypto-currency and exchanges research. The research is still ungoing though I have published some of my findings but one of my crushial discovery is that Binance is not just a cryptocurrency exchange but a driver of cryptocurrency and blockchain adoption. I am one of the few people trading in crypto exchanges as part of my research project so it often does not matter whether I gained a trade or lost provided I made my findings. I have used more than 15 exchanges only on experimental bases some of which include Coinbase, Blockchain, Kraken, Bitrrex, Tradesatoshi, Binance, Kucoin, Bit-Z, Cryptopia, Luno, Abucoin and Cryptagio just to mention a few. My criteria of registering include Low volume, High Volume, Low fee, High Fee, difficulty of registration, exchange incentive, exchange policy, cardinal goal of exchange, Fiat or non-fiat, age of exchange and other criteria which I will still publish in my future paper. I have lost and gained crypto in the process of the research but I saw some things that Binance does differently which may or may not have contributed to surge in users interest.
- Binance Key Drivers In discussing the story of a young exchange called Binance there are some findings worth mentioning and they include: i) Segregation (Discrimination) : In all the money transfer companies and exchanges I have studied before the advent of Binance there is serious segregation among its customers. In some exchanges this differentiation is very scaring but in Binance it is very minimal, unnoticeable and almost non existent. I will use three experiences to explain, in Coinbase my country (Nigeria) can not trade but they can deposit and withdraw crypto, so why allow them to register only to segregate. Most exchanges, majority of users do not withraw more than 1BTC per day but exchanges group them into three level of users which have different withdrawal limits ( which is very OK for some reasons) but many exchanges go further to place trade restrictions based on this segregations. For instance Cryptopia do not allow you to trade USDT or its equivalent if you are not in certain levels. Bit-z will not allow you to participate in some trading competition or even get airdrops if you are not in some category of user. There are more instances but you will not experience any difference as a user until you want to withdraw above certain limits in Binance. Binance operates little or no discrimination allowing 'Private Crypto' users to remain in level 1 and operate freely provided they withraw smaller amounts. There are many world micro scale and unbanked users who can not afford to get any valid government ID for level 3 registration- Binance is were they fill welcomed. I spent some months as level 1 client and now am in level 2 but my withrawal is hardly upto one BTC a day so I feel no difference but that's not true with many exchanges. ii) Incentives: The unprecidented incentives that Binance offer can make some body with zero dollar to be a marchant with Binance. In November 2017, I told my research students who do not have funds to complete their research work, to register in Binance and generate money to finish their research; they did and are about to graduate. Binance empowered them, they simply registered, got some Airdrops from some new crypto companies, sold and traded with the money and where given trading bonuses and they sold the coins and paid for there research costs via Binance. Their trading incentive vary so much that all kinds of traders benefit, to be more concrete Ontology had a condition of trading 0.5BTC over a week. Using $100 a trader can easily trade five times a day which is $1000 buy-sell volume, in five days that is $5000 volume above 0.5BTC at that time and they gave 1000 ONT which was worth (at some time) $10000, what else is incentive or empowerment. No one can deny these facts. Some new exchanges have copied these model which is great for cryptocurrency adoption. All young school leavers in my area are into Airdrop due to this model introduced by Binance. iii) Low trading Fee : Binance is a cryptocurrency which is accepted for transaction in my local domain thanks to the exchange, for the past six months IT training centers in my locality accept and use Binance as payment for IT training. Trading fee is half when the coin is used to pay for fees but due to its relative stability Binance have found usage in other payments. Beginners can easily learn trading at reduced cost due to low fees. Majority of crypto traders in Binance are startup traders who are learning fast due to trading incentives. iv) High Volume: One of the Support team in Abucoin said that people go to Binance because of there high trading volumes, many people still have the same opinion. But as an academics I know that at a time Binance traded less than 1BTC during their starting stage either as one second or one minute trade volume, they did not start the first second of opening trade with large volumes. BTC only have less than 40% of all Crypto (Coinmarketcap,2018) and Binance introduce good altcoins which was followed by volumes. I was told when Binance started by a forum friend that an exchange that does not offer fiat currency will not attract traders but I differed, insisting that a trader will always prefer to make money in 'Aghanistan and spend it in Paris'. If a trader can ingage in quality trade in an exchange he will only go to the next exchange for cash-out. Cashing out is not always a problem once there is another exchange that is ready to exchange even a single crypto like Bitcoin or even TUSD or USDT. v) Honesty: Binance is an honest exchange, they promise they will distribute prices for trade in a given time you will get it before the time or right at the time they promised. Some exchanges do not add crypto handling delays when they make promise only to discover that a transfer may take 30 seconds today and 3 days the next hour. Binance will tell you two weeks after trading competition the coins will be distributed, they do not usually mean it. What they actually said is that "in two days time after context we will send the winners there coins and the coins can take at most 10 days to reach". In most cases the coins reach in seconds instead of the added days they promised. Cryptocurrency is scary and new users are afraid of dealing with faceless customer service personnels, emails and text messages. What they always want is "your coin is confirming 1/30 confirmations"; they can go to sleep believing that in 5days the coin will be their own. Binance delivers on promises. When they found abnormality that will make customers loss they will raise alarm. For instance during Bytecoin surden price spike in early May 2018 they warned customers to trade with cursion explaining that coin deposit problem may have caused price abnormality-honesty. They constantly remind you to trade with their Binance coin for low fee even when they know that your failure to do that results to higher fees and more gain to the company but they prefer to honestly warn customers. v) Selection of Promising Alt Coins: I am a lecturer in Africa and have never worked with any crypto company but I have traded more than 15 coins in Binance (the evidence is the piece of coin left) but the coins are promising. The coin that is usually at the bottom of the Binance volume is Via Coin which is still a good coin (from my accessment). Most of the coins listed in the exchange easily move up creating great choice and selection space for traders. When crypto exchange grow, users grow and trading space need to grow, Binance is master in that strategy. If a company produces a fake coin or even a 'good coin' with bad road map they will not even approach Binance for listing for two reasons- fear of not spending their money since they do not have plans to make more money from long term plan, fear that there listing request will be rejected. The choice of coins cut across prices and different rating in Coinmarketcap; Binance does not wait for a coin to be in the first 100 before listing them rather if they believe the coin is promising they select the coin. vi) Recognition of developer community Any IT company today that do not take care of its developers or technical teams well will loose them to other cryptocurrency companies and there are many of them coming up. Exchanges seem to believe that there job is to deal on other peoples products but Binance has shown that the best we to understand the crypto world is by been one with it. Binance is not just an exchange, it is a cryptocurrency, a blockchain technology and security and software development organization. This is correct but that can not be said of many exchanges except those copying Binance model. Surprisingly those exchanges copying Binance are also getting visible result. vii) Efficiency and Speed of Site and Trading App. There are things that the Western countries take for granted- power availability and very high speed internet connectivity. Readers of this story from advanced nations should jump to the next point. But the rest of the world have little power which is not even available always and internet cost are high and speed are extremely low. Even when the provider have technology to provide high speed users prefer to have their data last for one full month than to see it finished due to high speed usage. Some times provider intentionally slow down speed to avoid customers outcry of quick finishing data. This calls for exchanges to carry majority of users along in developing there trading platforms. The faster the better and Binance is acting and continues to work on this. viii) Security This is closely related to technology since internally trading apps needed to be upgraded to remain ahead of hackers, crakers and phishing organisations. Early in the year 2018 Binance had a phishing attack, we could easily imagine the state of the cryptocurrency exchange now is they had suceeded. But the phishers could not still coins even when they have broken in, this increased users confidence in the exchange and draw more new clients. The new features added to the exchange have even made email phishing extremely difficult to phishers. There are other security features added which users can sence but are hidden to public discussion. ix) Rich Binance is a rich company, rich in their attitude to the world community, rich in income generation, rich in the way they give to start up companies even when they are also start up themselves, rich in their logo and rich in communicating with customers. Rich in innovative ideas. Binance is rich. Poverty repels, so Binance will keep attracting every body to itself. x) Binance is blessed with an experienced and humble CEO When a company has an experienced leader the multiplier effect is seeing on the rest of the staff. Innovative staff will have little headache in getting their ideas approved. An arrogant leader is a liability to a company and make the company to keep regreting its actions. The leader is planning to go to Malta but he is still insisting that it is just a branch of Binance making the current host the consider its stands on tough regulation.
- Binance Road Pot Holes A driver must be careful about pot holes else his good car may tumble. Binance no dought now is really a cryptocurrency innovation adoption driver and must watch out for the following. i) Rise of Communities around cryptos Communities grow a company and communities make companies to go down. If all traders pull out from Binance the company will be history. When Bitcoin started, there was one cryptocurrency community, one group of Bitcoin developers, one Bitcoin enthusiast, but today that is far from the reality. We now have many Bitcoin communities (BTC, BCH, BTCP, BTG etc) and many altcoin communities. Passion have started to roll in these communities and support is continously solicited and soon tougher competitions will ensure the coin to list need to be voted for and a new way for paying for coin listing should be deviced using Binance Coin to vote. ii) Ico Support Binance supports ICOs but for more than three months there LaunchPad on their website have being showing Bread and Gifto, this is very bad. When not launching a coin the LaunchPad need to be empty and when new coin are not coming to the Binance LaunchPad the LaunchPad should go to new coins. Binance community can vote to select the next coin that will go into the LaunchPad. If it required payment then they can use their binance coin to vote and get rewarded by the new coin in a form of shared bounty or airdrop. iii) Strong Community We have discussed the rise of communities, binance is lacking on strong community (a group that have strong passion for Binance as an Exchange, a Cryptocurrency and as a Technology). A community driven by volunteers and not by Binance employee, a community that will work for the passion and not for duty. I see three Binance and the group must be very passionate about the three. This may not be group of Binance Traders - no they are too busy and have no coin or exchange friend. Binance may be working towards this direction in the Binance Angels project but wisdom must be used to get the correct arrow head of the community and to actually let go of the person to freely handle the community. If the staff want to lord it on the community followership will be for duty not for the passion. iv) Binance Bounties Binance have so many trading bounties won after the competitions. This is good but part of this bounties need to be used to bring in more new users who will register and a buy Binance and smaller amount for new members without any conditions. The trade competitions the way most of them are ends up in the hands of already suceessful members who can trade once a day and win the competition due to there financial musle. These group of big traders are highly desirable and will continue to remain in the first to third places. But future members need to be attracted with the little tokens falling out from every bounty. v) Need for Binance_Inc Exchange Binance is so big and will get bigger. Binance need to have another cryptocurrency exchange, but instead of just an exchange Binance should have an incubator exchange. 'Division Two exchange' this exchange will be low volume and should serve as a source for listing in the main exchange. If a coin is performing with high volume it can be moved to the main exchange. In a crypto in the main exchange is not performing in they can be moved back to the incubator exchange. In this way Binance will remain the technology and develop in other areas.
- Binance as an Innovative Crypto-currency Adoption Driver It has been said that adoption is the original dependent variable in innovation research and the desirable property of innovative systems which change agents seek to enhance. "Innovation" on the other hand is any change in structure, design, products, or processes in which there is a definable new element introduced into the system; the process is essentially the same for all technologies including blockchain technologies. In innovative space the characteristics of people or organizations are associated with higher levels of adoption and the company that makes the adoption to happen faster is very innovative. The voiced or unvoiced assumption underlying the examination of correlates of innovativeness is causal: If we manipulate the characteristics of organizations or individuals so that they more closely resemble those of the highly innovative, we will make the organizations or individuals themselves more innovative (Eveland, 1979)
Conclusion It is very easy to conclude this article by saying that since Binance was able to make more people to adopt cryptocurrency in a fast manner that they are not only drivers of cryptocurrency adoption but they are Innovative. Ask of an innovative cryptocurrency exchange the response should be Binance, when they move others copy so without the statistics of their trade volumes one can easily see that they are truely the leaders that the crypto exchange space have today.
References Eveland J. D. (1979) Issues in Using the Concept of "Adoption of Innovations", Journal of Technology Transfer, 4(1) 1-13, Retrieved 2018 from jdeveland.com/papers%20for%20Website/adoption.htm
EMC Education Services (2010). Information Storage and Management: Storing, Managing, and Protecting Digital Information. John Wiley & Sons
Nakamoto S. (2009) Bitcoin: A Peer-to-Peer Electronic Cash System, Retrieved 30 May, 2018.
Sarah M., Marjori P., Grant J., Kirill L., Damon M., Geoffrey M. V., and Stefan S.,(2016) A Fistful of Bitcoins: Characterizing Payments among Men with No Names, Communications of the ACM, 59(4), 86-93,USA.
Jacob M. Appel (2018); "Must Physicians Report Impaired Driving? Rethinking a Duty on a Collision Course with Itself"; Journal of Clinical Ethics (volume 20, number 2).
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The history of cryptocurrency is fraught with people losing their coins, whether through carelessness, greed, bad luck, or some combination of the above. Some ignored the first rule of crypto: “never leave your crypto on an exchange.” When their exchange failed, their crypto went with it. Others were negligent with their storage solutions, misplacing old hard drives, using software wallets on malware-ridden PCs, forgetting the passwords to hardware wallets. Some were greedy and lost their coins to a Nigerian Crypto Prince or a Ponzi scheme. And some were just plain unlucky. These unfortunate tales remind us to be careful with our crypto, and underscore the need for new solutions to storing crypto safely.
Buying cryptocurrency used to be a risky prospect. There weren’t many exchanges, they often required you to deposit fiat via a third party, you certainly couldn’t use your credit card, and there was hardly any regulation. It was considered unwise to leave your cryptocurrency on the exchange after you bought it. Many people today feel safe buying some crypto on Coinbase or Binance, without transferring it to a personal wallet, but in those wild years you absolutely wanted control of your private keys. If the exchange had the keys, you were trusting your crypto to the reputation of a small company, located who-knows-where, that made its revenue by exchanging speculative, unregulated digital currencies between anonymous traders. One such company was Mt. Gox.
Mt Gox was a Tokyo based Bitcoin exchange. Led by CEO Mark Karpelès, who was also majority shareholder and lead developer, Mt Gox expanded quickly. Founded in 2010 and bought by Karpelès in 2011, Mt. Gox quickly dominated the Bitcoin market, responsible for 70% of BTC volume in 2013, with 1.1 million active accounts. But despite the outwards success, there were some signs that all was not well internally. Karpelès refused to allow any updates to the exchange software, without approving changes to the source code, meaning needed updates could languish for weeks. In June, 2011 the exchange lost $8.75 million in Bitcoin to a cyberattack, and the site went offline. According to friends of Karpelès who flew in to help get Mt. Gox back online, Karpelès seemed surprisingly relaxed about the affair, even taking the weekend off.
Mt. Gox was brought back online, but soon after US Federal agents seized $5 million from the company’s US account, and former business partner CoinLab sued for $75 million. Karpelès seemed more focused on creating a Bitcoin Cafe in the Mt. Gox building than on addressing these many issues. After an internal memo was leaked disclosing the disappearance of 850,000 BTC (worth about $460 million at the time), Mt. Gox collapsed into bankruptcy. It is still in bankruptcy proceedings today. https://preview.redd.it/ycurk9dlnj611.jpg?width=800&format=pjpg&auto=webp&s=7b8199c3dc1e58536f9813918b46cca43a4edec4
One might be tempted to dismiss the failure of Mt. Gox as a lesson learned by the crypto community, a mistake that wouldn’t be repeated. Sadly, exchanges continue to lose their customers’ crypto with startling regularity. A less spectacular but much more recent loss was $150 million of Nano stolen from exchange Bitgrail in February. Bitgrail’s management blamed the Nano blockchain software for the theft, but has refused to release any evidence. Nano, for its part, has vigorously defended itself against Bitgrail’s claims, showing that the missing Nano was stored in a hot wallet (one that is accessible online) instead of a cold wallet, which would have been more protected. Whoever’s to blame, if you had Nano on Bitgrail, it’s gone. Similarly, if you had any crypto on Korean exchange Youbit, you’re down 17%, which was stolen in a hack in December. Or if you used Bitconnect, you’ll find your Bitconnect tokens became nearly worthless after the company shuttered in January. https://preview.redd.it/c9yvtynqnj611.png?width=800&format=png&auto=webp&s=907e45703cc7e3e9e823f1cce1700a68c54075f6
“Dozens of exchanges have failed since the creation of Bitcoin, taking many small fortunes with them. This should serve as a reminder to never leave your cryptocurrency on an exchange; however there are other ways to lose your coins,” according to Saifu co-founder Evgeny Vigovsky.
In October of 2017, a new cryptocurrency was created called Bitcoin Gold. Bitcoin Gold is a fork of the Bitcoin blockchain. This meant that anyone who owned Bitcoin was now entitled to an equivalent amount of Bitcoin Gold. Many were eager to claim their share, and some found a Bitcoin Gold online wallet called mybtgwallet.com. This helpful site offered to assist users claim their Bitcoin Gold, instructing them to enter their wallet’s seed or private key. The seed is a series of words, usually 24, that can be used to recreate a wallet if it’s lost or corrupted. Giving someone your wallet seed or private keys is akin to giving them the keys to your safe deposit box, and the victims of mybtgwallet found their wallets were quickly emptied of whatever cryptocurrencies they held. More than $3 million in Bitcoin was stolen. https://preview.redd.it/e5btpnfunj611.png?width=800&format=png&auto=webp&s=e2fa9a011de23e4f223d815567b061e3d2bc7625
MyEtherWallet is a popular online wallet for Ethereum and other tokens built on the Ethereum blockchain. The wallet is free to use, and as far as online wallets go, it’s secure, requiring users to take steps to protect themselves. In December, the MyEtherWallet iOS app hit the #3 spot on the App Store in the finance category. Unfortunately for the thousands of users who bought the app for $4.99, this app was just another scam. MyEtherWallet doesn’t have an app (and Apple doesn’t allow wallet apps on the App Store). Suspicious users alerted the MyEtherWallet team, who alerted Apple. Two days later, Apple responded and removed the app from the app store. https://preview.redd.it/jcokfj6ynj611.png?width=519&format=png&auto=webp&s=903ea36e5e749a1854ae8fcacabc19032276ed04
Less colorful but more insidious, there are a plethora of malware that targets cryptocurrency wallets. These programs run quietly in the background, searching for wallet software on your computer and uploading your credentials. A particularly nasty bit of malware was the Pony botnet, discovered in September 2014. The Pony botnet used a trojan virus to compromise about 700,000 accounts, including email accounts, website login credentials, and other sensitive information. Bitcoin totalling 335 were stolen from 85 different wallets; those Bitcoin are worth about $2.7 million today.
Some classic scams have been updated for cryptocurrencies, including a variation on the Nigerian prince con, harnessing social media to attract victims. In the classic Nigerian prince scam, the victim would receive an email from a Nigerian prince who needs help to move his wealth to the United States. The prince needs someone to deposit a check for him, then wire out the funds. They pay the wire fee but get to keep part of the funds from the deposited check. Typically the victim’s bank informs them that they’ve deposited a bad check well after they’ve wired out the funds for the “Prince.”
In the new variation, scammers impersonate well-known figures of the tech world like Elon Musk or John McAfee, often on Twitter. They use a name similar to the celebrity, and their picture. They claim to be giving away cryptocurrency to the first 100 people to respond to the tweet, but there’s a catch; respondents need to send a small amount of crypto to pay for the “fees.” Naturally, the scammer just keeps these small bits of crypto and does not send anything in return. Here’s “Elon Msk” giving away some free Bitcoin: https://preview.redd.it/jwasx3v3oj611.png?width=622&format=png&auto=webp&s=d1a9da3a2cc9859527e3b7939c61c61428a71a85
Thankfully, crypto security is steadily improving. The rise in value and mainstream adoption have attracted established cybersecurity players, and innovative new storage solutions are being created with increasing frequency. Our firm Saifu has developed its own crypto storage hardware in partnership with Thales. “Users’ crypto keys are stored in Thales hardware security modules, which cannot be accessed remotely. Even if we were ever hacked, our customers’ cryptocurrencies are protected. As it becomes safer and easier to buy and use cryptocurrencies, we believe mainstream adoption will skyrocket. The crypto revolution is just beginning,” Vigovsky, the Saifu co-founder, says.
About Bitcoin. Bitcoin price today is $15,507.43 USD with a 24-hour trading volume of $40,726,877,345 USD. Bitcoin is up 9.91% in the last 24 hours. The current CoinMarketCap ranking is #1, with a market cap of $287,430,180,047 USD. The first commercial transaction with Bitcoin occurred in 2010 when two pizzas were purchased for 10,000 Bitcoins (worth approximately $144 million). Since bitcoin is not an actual physical currency, there was no real value to begin with. They were active in the development of bitcoin up until December 2010. More. Introduction. General Data and Information The theory behind Bitcoin was first described by Satoshi Nakomoto in a paper “Bitcoin: A Peer to Peer Electronic Cash System”published to a cryptographic mailing list on the 31st of October 2008. In this paper, Satoshi described the protocol (Proof of Work) that would ... The gold industry was shaken when it was discovered that 83 tons of fake gold bars were used to back loans worth 20 billion yuan in China. While Chinese authorities have not said whether the real ... Since the birth of Bitcoin in 2008, the world of cryptocurrencies has expanded at an exponential rate. With there being hundreds of cryptocurrencies in existence, it’s only natural that places where people can buy, sell, and trade them would be created. Binance is one of these, and is currently the most popular cryptocurrency exchange in the world. Central Banks Dump Gold for the First Time Since 2010, Precious Metal Drops 9% Since August High . A few central banks have started selling tons of gold for the first time since 2010 in order to ... Bitcoin is unique. It is the first of its kind. Compared to other currencies, bitcoin is deflationary in nature because of its fixed supply cap. It is not possible to print more than 21 million bitcoins into existence. Think about this… There are roughly 35 million millionaires in the world. That would mean if every … The world's largest bitcoin and cryptocurrency exchange by volume, Binance, has said "de-listed" Bitcoin SV, striking it from the exchange as of April 22 as it no longer meets the high level of standard they expect. Elsewhere, the exchange ShapeShift said it will delist bitcoin SV too and another exchange, Kraken, is polling its users on whether to continue supporting the cryptocurrency. So far, over 1% of the world’s BTC has been stolen from exchanges and traders continue to leave vast quantities of funds on centralized trading platforms. Binance said 7,000 bitcoins were stolen by hackers in a single transaction. Photo by Maxim Shipenkov/EPA-EFE May 8 (UPI) -- Hackers have stolen more than $40 million worth of bitcoin from the world's largest cryptocurrency exchange, officials said.
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