South Korea’s Bithumb was hacked! How can decentralized exchanges like Exscudo prevent this?
Cryptocurrency exchanges are, by norm, centralized. At least until a few years ago, before blockchain technology matured enough to allow for decentralized exchanges to exist. Centralized exchange markets provide a valuable service, as they are convenient, easy to use and access, and feature advanced trading features like margin trading, lending and stop loss. But, when used, you are always at a liability because your money is inevitably put in someone else’s hands.
For the most part, it’s relatively safe to have cryptos in exchanges, unless the exchange itself or your account gets hacked, of course. However, it’s hard to tell which exchanges are in danger before they are attacked and these things do happen, Mt. Gox and Bitfinex are perfect examples.
Recently, a considerable hack took place in the largest Bitcoin and Ether exchange in South Korea. Bithumb, which is also considered one of the top five Bitcoin and cryptocurrency exchanges in the world, and host of the world’s largest Ether market, was hacked in June. The hack was reported to the authorities on June 30, and is estimated to have affected 30,000 people, roughly 3% of the site’s customers.
The hack didn’t happen by exploiting a flaw in the code of the company’s internal network, but rather by stealing a database of users off of an employee home personal computer. Allegedly, the hackers were able to get away with tens of thousands of dollars, the equivalent to hundreds of millions KRW. The good news is that Bithumb has already announced that it will be reimbursing customers.
In a way, these hacks can have an “happy ending” if customers get reimbursed, like Bitfinex customers were. The problem is that we are giving away our money to criminals, who then dump cryptocurrencies in the market, bringing their price down quickly.
By removing the power to issue money from a centralized authority, Bitcoin was meant to bring power back to the people, who can take full control of their funds. But by entrusting our coins to third party service providers, like exchanges, we defeat the purpose of the network itself. So, what’s the solution?
Decentralized cryptocurrency exchanges can be the answer! In these kinds of markets, funds aren’t held by a third party and trades occur directly between users (peer-to-peer). Among other new solutions being developed right now, this system usually works either through the creation of proxy tokens, crypto assets that represent a currency, assets, that can represent shares of a company for example, or decentralized multi-signature escrow system.
Decentralized exchanges remove the need to trust a third party entity and also provide the user with a greater level of privacy. Other problems like server downtime and the aforementioned hacks are avoided because there is no central server to hack, but rather a network of nodes that host the exchange. Although decentralized exchanges exist, they are not so easy to use and don’t include advanced trading features.
That’s exactly where Exscudo comes in! The mission behind the Exscudo team is to create a financial ecosystem that unites the world of traditional finance and the cryptocurrency market. In order to so, Exscudo offers six different services:
- The Decentralized exchange, with full provision trading, margin trading, options, futures and settlement contracts; charts, all data is located in the same place and is updated in real time;
- Trading terminals, offering a wide range of tools for professionals (supporting different types of orders, online-listings, technical indicators, trading signals and copies of transactions) on a platform that is adaptable, user-friendly and available in web, mobile (iOS, Android) and desktop (Linux, MacOS, Windows) platforms;
- Wallet and protected messenger, an application that includes a multi-currency wallet, a decentralized encrypted messenger that allows sending and receiving money through chat, and another access point to users personal accounts and Exscudo services;
- Debit cards, allowing exchanges between currencies in real time, the card is accepted all over the world for online purchases and in brick-and-mortar stores with minimum commissions;
- Merchant Platform, offering solutions to business entities that want to offer their clients fast, safe and cheap ways to pay with cryptocurrencies.
All of the aforementioned services will be made possible because of Exscudo’s own distributed blockchain network, EON. It uses smart transactions which are somewhat similar to Ethereum smart contracts. EON technology is what makes Exscudo ecosystem decentralized, simple, fast, efficient, transparent and verifiable. Although some code will be shared on Github, EON is not a fully open source project.
In order to fund further development and marketing of the Exscudo project, a crowdfunding campaign took place in the form of an Initial Coin Offering (ICO). The ICO ended in May 30th and had a successful run, raising a total of 2,314 bitcoins. The platform is currently should be fully launched in the first or second quarter of 2018.