It is simply amazing how quickly the bitcoin world is evolving. We’ve gone from having one large exchange (Mt.Gox) being able to take the whole space down with it in 2013, to now having many exchanges capable of handling large volume (Binance, Bitfinex, Kraken, Gemini, GDAX etc).
Binance underwent a large, coordinated hack and managed to repel it. They have a summary post on their support page here: Summary of the Phishing and Attempted Stealing Incident on Binance.
However, as withdrawals were already automatically disabled by our risk management system, none of the withdrawals successfully went out.
But it looks like that wasn’t all, as they’re now putting up a bounty for information leading to the arrest of the hackers.
In this post Binance state:
Binance is offering a $250,000 USD equivalent bounty to anyone who supplies information that leads to the legal arrest of the hackers involved in the attempted hacking incident on Binance on March 7th, 2018.
This is certainly raising the stakes for would be exchange attackers. It also makes it more costly to run these hacking operations, if any one of the hacking team could defect for the bounty.
Decentralised bitcoin exchanges vs centralised exchanges
While some people believe that decentralised exchanges are the future, I’m not as convinced this will work, as there is always an interaction back with the centralised fiat banking system. This interaction back with the centralised fiat system becomes more important for anyone wanting to do significant $ volume or number of trades. There are also still some concerns about whether the decentralised exchanges can get the requisite liquidity.
I think we’re probably moving into an era where centralised exchanges exist alongside decentralised exchanges. Centralised exchanges will be used by the more legitimate, big time players who need the volume. Decentralised exchanges will be used by smaller, retail level players who want more privacy and anonymity.
Remember though, this is mostly a temporary ‘on ramp’ thing anyway. Once enough people have been on-boarded into bitcoin, we’ll see the full gamut of people just being paid directly in bitcoin, selling things for bitcoin, and normal everyday banks offering bitcoin bank accounts. In the post hyperbitcoinization world, maybe there won’t be as much need for bitcoin exchanges.
Crazy survival of the fittest game
In any case, this episode in bitcoin’s history helps show that as people attack bitcoin and bitcoin businesses, those businesses evolve different responses to attack. Rather than killing bitcoin, bitcoin ends up becoming even more hardened against that particular type of attack.