Dovey Wan, a prominent crypto investor and analyst, has argued that “the fact … a top exchange was hacked [recently] did not affect the crypto market” could mean that the evolving digital asset ecosystem is now “more robust” than it was during the “Mt. Gox age.”
Wan, a partner at Primitive Ventures, a team of “market cycle agnostic” crypto investors who’ve invested an undisclosed amount in Zcash (ZEC) and Dfinity (“the world computer”), believes that security breaches of small or medium-sized exchanges may not necessarily have an adverse effect on cryptocurrency prices or investor sentiment, in general.
The fact that single top exchange being hacked didn’t affect the market means— Dovey Wan 🦖 (@DoveyWan) March 31, 2019
1) the overall system is much more robust than Mt.gox age (but not sure abt Binance/Coinbase hack)
2) market sentiment is at a bottom as ppl are insensitive to negativity or just indifferent
Are Crypto Investors “Insensitive” Or “Indifferent” To Exchange Hacks?
However, she acknowledged that this might not be the case if the security of leading digital asset exchanges such as Malta-based Binance and San Francisco-based Coinbase was compromised. Moreover, Wan thinks investor confidence and sentiment towards the cryptoasset market could be quite low at the moment. Because of this, she noted that traders and investors may be “insensitive to negativity or just indifferent.”
Although Wan did not specify which “top” exchange she was referring to, her comments were most likely in reference to the recent hack that took place on Bithumb. On March 29th, 2019, South Korea-based crypto exchange Bithumb suffered a security breach, resulting in millions of EOS tokens being stolen.
At the time of hack, Wan had alerted her followers with periodic and timely updates as the hacker(s) reportedly began transferring the large amount of stolen tokens to other exchanges, some of which did not require know-your-customer (KYC) checks. This, most likely in an attempt to quickly cash out on their illicit earnings.
Centralized Exchanges Still Holding Millions In Hot Wallets
Commenting on these types of incidents, Wan also believes that “the size of the hack is insignificant.” Moreover, she revealed that “many centralized exchanges [are still] holding hundreds of millions of assets in their hot wallets” which “is just a time bomb” or invitation ”for the next hack."
In response to Wan’s comments and observations, Twitter user Christopher.Baradaran (@cbaradaran1) said that these types of hacks strongly suggest that we need to start building and using more decentralized exchanges (DEXs).
“Not Your Keys, Not Your Bitcoin”
While there have recently been arguments about what type of platform may qualify as a DEX, as some of these peer-to-peer (P2P) trading platforms such as LocalBitcoins now require know-your-customer (KYC) checks (suggesting they’re not truly decentralized), many security researchers recommend not sharing your private keys with anyone.
There’s also a saying, “not your keys, not your bitcoin” - which means that users only have true ownership of their cryptoassets if they have access to the private keys associated with those assets. If any entity manages to obtain access to a users’ private keys, then they can also gain access to the funds and potentially steal them.