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Robust Crypto Exchanges Needed In The Wake Of Hacking Incidences

Currencies / BlockChain Jul 26, 2018 - 08:29 PM GMT

By: Andrew_Cioffi

Currencies

2018 has not been a great year for security in the crypto market. In fact, it has been one of the worst years for cryptocurrency holders. This year, huge successful hacking attempts have led to massive crypto losses. 2018 has seen the record of most losses increase and the year has not even ended. The successful attack on NEM led to the theft of tokens worth over $500 million. In total, over $1.7 billion USD have been lost to scams, hacks and other forms of theft. The obvious question being asked by users now is whether a decentralized system will ever be viable. Prospects for exploring the area of decentralized exchange platforms have also been explored. In 2018, the quest to mend security flaws in the crypto trading world is on.




The Inherent Challenges of Trading IOUs

Cryptocurrency trading is praised for its decentralized trading system which allows for a shared ledger. While this is indeed remarkable, the drawback is that the exchanges themselves where transactions take place are centralized. They, therefore, oversee issues like security and marketplace issues. 

The security of the exchanges is thus compromised even though the blockchain itself is secure. A simple modification of records by hackers is the only thing needed for the successful theft of assets. The fact that traders trade IOUs instead of actual cryptos also does not help. It is for some of these reasons that organizations like the OAX FOundation have come up to support the establishment of decentralized exchanges.

The Dream for Decentralized Trading



Lionello Lunesu, who has been helping firms like OAX Foundation achieve their goals has indicated that distributed wallets would particularly be great for dissuading hackers. He reckons that smart contracts would be much more valuable if they had a decentralized way of authentication. OAX has been keen on providing an alternative of smart contracts authentication where over-reliance on blockchain will be reduced. The organization has been borrowing heavily from traditional securities trading. Bitcoin News haas previously touched on the benefits of securities trading which can be borrowed by the cryptocurrency world.

The Role of Mediators

Like other forms of trading, there will be a need for referees who will act as the link between traders and platforms. A lot of misconduct goes on undetected simply because there are no mediators. The trading of bitcoin is for instance much different than it was several years ago when it was launched. Back then, trading was purely decentralized but as time went, the need for centralization kept coming up.

Even though smart contracts were a huge breakthrough for security, they were also subject to some security challenges. Experts like Terence Tsang from Tidebit reckon that multip[e servers will be needed to reduce the risks presented by centralized exchange platforms. 

The Call for Regulation

Regulation is also always a constant topic in the digital currency realm. Regulation often brings the much-needed oversight and standards in any decentralized market. Since crypto exchanges are not regulated, there is no easy way of dictating standards. Experts have recently been very vocal on the need for regulation. In the wake of recent hacking, regulation as a form of risk control has become a very plausible argument.

By Andrew Cioffi

© 2018 Copyright Andrew Cioffi - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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