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(PDF) THE GLOBAL VIEW OF BITCOIN AND ITS ECONOMIC IMPACT
5 Reasons Why Storing your Crypto on an Exchange is a Bad Idea!
Most of us already know that storing cryptocurrency is inconvenient and almost too difficult. It’s not surprising, given how new the technology is. We’re still a little while away before we hit high adoption rates for cryptocurrency because of this. But with tech startups paving the way for innovative solutions around storing cryptocurrencies,we’ll hopefully experience more convenience, security, and trustworthy services. For some of us that continue with the struggle, we continue the with the hard route and ‘be our own bank_’. Others continue to go down the _somewhat easier route: leaving their cryptocurrency on the exchange. Keeping your cryptocurrencies on exchanges does offer some benefits though. Pros:
Offers liquidity — transfer coins in/out very quickly
No danger of losing access because of forgotten passwords or seeds
Low fees to transfer between coins
Access to a large number of altcoins
Offer multi wallet capability (storage for multiple cryptocurrencies)
No technical knowledge required to setup
Offers two factor authentication
These are significant advantages over cold storage solutions currently. However, the following will make you think twice before you keep your cryptocurrency on an exchange.
5. Exchange BTC-E seized by FBI- locking users funds
Mid 2017 BTC-E, a popular exchange in the past, was seized by the FBI over the alleged Alexander Vinnik who was found guilty of laundering funds through the exchange. Alexander Vinnik was originally thought to be one of the operators of the website, however these claims were denied by BTC-E later on. Since then BTC-E has shipped operations to New Zealand and re-branded to WEX. It is believed that most users have been able to access their funds. Having said that, it was difficult time during the down-time, with all users unsure if they’d ever be able to access their funds. Although the user base continues to grow, the community had been split over BTC-E. Several users have resisted transacting on the exchange due to their secretive operations. On the other hand BTC-E has had significant support, one user commenting “BTC-E deserves respect” over their commitment to re-opening the portal to it’s users. It has been in-evident that BTC-E played any part in the laundering. So, although BTC-E may not have been 100% at fault- the story does show you the risk you put yourself against trusting a third party to mind your coins for you.
4. Indian crypto exchange Coinsecure loses $3.5m in customers’ bitcoin
April 2018 An exchange operating in India had nearly $3.5 million worth of user’s Bitcoin stolen. The company blamed the security chief, Dr Amitabh Saxena for stealing the funds. Regardless of how the 438.318 Bitcoin went missing- it clearly shows the lack of protective measures exchanges get away with. Coinsecure claims that they are working “_day in and day out, and investigations are in full swing for a possible recovery of the lost BTC_”. However they are treading carefully, even with their promises, their website states “should we be able to recover all of our BTC, all BTC holdings will be refunded”. Key words being ‘should we be able to’.
3. Italian exchange BitGrail claims $195 million worth of Nano (XRB) lost through hack
February 2018 The exchange claimed that the cryptocurrency was stolen through a hack. Bitgrail have not accepted responsibility for the breach, claiming that the Nano cryptocurrency was flawed. Nano on the other hand continues to hold its ground, stating: “to date, all reliable evidence we have reviewed continues to point to a bug in BitGrail’s exchange software as the reason for the loss of funds.”
Once again, BitGrail confirms to have been a victim of theft. A crime made possible by taking advantage of known failures in the NANO team’s various software (Rai Node and the Official Block Explorer) and therefore, for these reasons and in accordance with the law, BitGrail doesn’t consider itself responsible for the unforeseen circumstances.- Official statement from BitGrail
After several months of halt, Bitgrail has announced a commencement of operations on 2 May 2018 at 10:00 UTC stating, “the markets and withdrawals will be operating for all coins, except for NANO/XRB. BitGrail re-open the NANO/XRB market for users at a date to be announced shortly.”
2. $400 Million Goes Missing From Japanese cryptocurrency Exchange Coincheck
January 2018 Yet another unsettling few months for investors as they wait for 500 million XEM tokens to be refunded after they were stolen. The Japanese exchangehalted all trading at the time and have recently restarted trading. This was regarded as one of the biggest cryptocurrency thefts, next to the infamous Mt Gox saga.
1. Mt. Gox Declares bankruptcy over 850,000 missing Bitcoin
2011–2014 Mt. Gox at its prime was regarded as one of the biggest Bitcoin exchanges. Unfortunately, it came to a nasty end once it was found that an extensive number of Bitcoins went missing. Investigations in 2015 found that the coins went missing over time, starting in 2011. By far, the most infamous and nerve wrecking loss in the history of cryptocurrency. The saga continues to date though, with the trustee claiming to have sold a large chunk of Bitcoin in early 2018. It was speculated but not definitive that this had a large hand in causing the Bitcoin crash around the time. The above is not intended to spread FUD. It is a reminder to be careful on how you store your cryptocurrency and raise awareness of the potential risks. The statement ‘be your own bank’, rings true still. It will continue to do so until we can receive service offerings that combine cryptocurrency with convenience, trust, and security. Having said that, there are also severe risks you carry if you do become your own bank. Damned if you do, damned if you don’t! Here’s a quick run down on different storage methods for cryptocurrencyand their associated risks. Most of the cryptocurrencies in the market today are based on ERC20. So you can also download this free guide on storing Ethereum and ERC20 tokens. But if you decide to continue storing your cryptocurrency on an exchange you may want to do the following:
Diversify across multiple exchanges- keeping your crypto on multiple exchange means less risk of losing ALL your holdings in case one exchange goes down or shuts down
Keep a small portion on an exchange for transfers while the rest in cold storage.
What's going on: As you may have noticed: Bitcoin is worth over 10k and EVERYBODY is talking about Bitcoin right now. Be it the early adopter who says "told you so" or the sceptic who still calls it a ponzi scheme. Besides all the good news there is a lot going on right now: South Korea's prime minister thinks that "Bitcoin corrupts the youth", Nobel Price-winning economist Joseph Stiglitz says "Bitcoin ought to be outlawed" because "it doesn’t serve any socially useful function" (people in Zimbabwe and Venezuela maybe disagree) and (this is maybe the most important development) Coinbase lost a legal battle in the US and was ordered to turn over identities of 14,355 cryptocurrency traders to the IRS. Let's look at 6 things that could make the bubble pop: 1. Destroyed by a Fork (again) While it's nice for HODLers to get free coins, excessive forking could turn out to be Bitcoin's Achilles' heel. Bitcoin Cash and the debate around who is the "real" Bitcoin and who is not could only be the beginning. 2. Killed by Regulators As mentioned Coinbase lost a court battle and now has to hand over the identities of thousands of crypto traders. Stiglitz says Bitcoin should be outlawed. While one can argue that harsh regulations like in China will make it go only stronger, it could also lead to a long crypto winter. 3. Mt. Gox 2.0 Sure, there are a lot more exchanges right now than there were when Mt. Gox was hacked in 2011 and bankrupted in 2014, but what if for example Coinbase gets hacked? $65 million were stolen in a Bitfinex hack in 2016, $31 million of the altcoin Tether were stolen a couple of weeks ago. You see: Hacks happen all the time and had not that much impact, but who knows if it stays this way? 4. Short Demise The Nasdaq wants to introduce Bitcoin futures in Q2 2018 and so do many other financial institutions. The aim is clear: They finally want their share of the juicy crypto pie. While most of the investors buy real Bitcoins and Cryptos at the moment, the introduction of financial derivates like futures could put a downward pressure on prices. 5. Profit Taking The fact that Coinbase went down because it couldn't handle all the traffic as Bitcoin crossed $10k and that Bitfinex struggles with money withdrawals shows one of the main problems cryptos right now face: scalability and liquidity. These uncertainties could make selling waves and price swings even worse when psychological barriers are crossed. 6. Death by ¯_(ツ)_/¯ My personal favorite: Unexpected things happen nearly everyday in the crypto space, so why should the beginning of a feared "crypto winter" not be started by something completely surprising? Maybe it's simply the dot-com bubble all over again: investors who have no clue how to really value high-flying assets flee for the exit en masse. Why should I care: It's totally fine that some of you may say "nah, what are you talking about ... Bitcoin has been declared dead a thousand times and is going stronger than ever". I don't like to take sides here and just want to listen to what different point of views have to say. Things are happening at a breakneck speed, so I think it's important to be realistic about the way all this will potentially go on. I know that last week I argued why Bitcoin is NOT a bubble ... but as I said: You have to be open to different perspectives and draw your own conclusions. Source:bloomberg.com, motherboard.vice.com, coindesk.comGIF:giphy.com Want to get essential news on Cryptocurrencies and everything Blockchain for free? Subscribe to Cryptomizer, the daily newsletter with the most essential news on Bitcoin and everything blockchain.
Out of the 850,000 BTC ($7.9 billion using today’s exchange rates) stolen from Mt Gox, Bloomberg. Bloomberg has forecast bitcoin to reach its record high of $20,000, and possibly $28,000 Bitcoin contains huge bubble, and the usage of it has 1% in contributing in the real economy while the rest more than 80% is for the purpose of speculation which beings more negative impact to the Tokyo-based bitcoin exchange Mt. Gox filed for bankruptcy last week, saying hackers had stolen the equivalent of $460 million from its online coffers. The news rocked the bitcoin world, and it The Mt. Gox bitcoin drama got more dramatic this week. A new report says that people have claimed $2.4 trillion worth of missing bitcoins from the case. Mt. Gox, called "Mount Gox" or simply "Gox", was the most widely used bitcoin currency exchange market from shortly after its inception in 2010 to its insolvency late 2013. The market was closed February 25, 2014 and has since filed for bankruptcy protection in Japan and the United States, after losing 640 thousand bitcoins.
Troubled bitcoin exchange MtGox was forced to close and file for bankruptcy protection this week, after bitcoins worth almost $500m were apparently stolen from its servers. Meanwhile, UK tax ... Tom DeMark on Bloomberg TV with Alix Steel. This feature is not available right now. Please try again later. craig wright now claims to own an address containing 79,000 stolen bitcoin from the mt gox hack event and asks blockstream to recover it for him. amazing. Social Media: Follow me on Dlive: https ... NewsBits On: Blockchain Reports 3 Millionth Bitcoin Wallet, WizSec Report released of the Stolen Mtgox Bitcoins, 50 million Telegram users can send bitcoin with Telebit. Video sources: https://www ... Feb. 10 (Bloomberg) -- Matt Miller reports on Bitcoin exchange Mt. Gox's cash withdrawal woes on Bloomberg Television's "In The Loop." (Source: Bloomberg)