Mon. Apr 6th, 2020

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Exchanges Need To Get Their Act Together If Cryptocurrencies Are To Succeed

2 min read

Over the years, crypto exchanges have been the center of many scandals. Whether it’s hacking, fraud or price manipulation, exchanges are not always far from any scandal. This has led investors to remain wary and nervy when it comes to exchanges. Especially when it comes to hacking, investors are always afraid of hearing their digital assets have been wiped out. Investigations of any wrongdoing from authorities have also sent cold shivers running down investors’ spine.

Whenever there has been a scandal, prices have reacted. In most instances, the scandal has been a hack. As soon as the reports begin leaking, we have seen the market crash. This is triggered by a sell-off which is the market’s default setting in times of trouble. Some investors are afraid that their assets will be hit, some are afraid that the thieves will flood the market and devalue the asset. Another bunch is just afraid that they will lose the little gains they have accumulated and that prices will take sometime before getting back to higher levels.

Exchanges Are Vital To Crypto Success

This script has been repeated countless times in history. It all began with the Mt. Gox hacking which remains one of the largest hacks to date. This has gone on over the years to the most recent one earlier this year when Binance was hacked. More recently, BitMEX also experienced a data breach, leaking thousands of its users’ emails. This has indeed become an all too common trend and one that must be dealt with if cryptocurrencies are to go mainstream and receive global recognition.

While all affected exchanges have promised to rectify the problem after the fact, its something that needs not happen in the first place.

Cryptocurrencies cannot succeed without exchanges. The vital role they play in the ecosystem cannot be disputed and they need to take responsibility for ensuring cryptocurrencies succeed.

Luckily, the market is also slowly maturing. In past years, data breaches in exchanges have seen volatility skyrocket. More recently, we have seen relative stability with prices in relation to the breaches. For example, despite BitMEX’s privacy breach, this did not seem to rock the market.

In the years to come and as cryptocurrencies receive global recognition, exchanges will need to be held to higher standards if the industry is to succeed in the long term.

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Cryptomute | 2020