Opinion

Latest Bitcoin Exchange Failure Casts Unjustified Doubts on Blockchain

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In the wake of yet another cryptocurrency exchange debacle even more people are struggling to assign blame to parties involved and the technology behind it; however, as in all other cases to date, the fact remains that the underlying blockchain technology is not the problem. From the infamous Mt. Gox disaster, through the Bitcurex and Canadian Bitcoins exchange hack, to the most recent failure of Bitfinex, the weaknesses in the exchanges that have been hacked have been human – errors in coding, judgement or morals allowing malefic people to exploit the business.

Besides exchanges, wallets, hardware manufacturers and other companies in the cryptocurrency sphere have also been attacked, again leading people to argue that blockchain is vulnerable. As with the exchanges, each time the problem has lain outside the blockchain. In some cases, the company email account has been hacked; for some, details have been taken from computers. Likewise, individuals who store their security information on personal computers risk having their passwords stolen.

Whilst the fact that people and companies have had funds stolen and businesses destroyed is unforgivable, it is wrong, and indeed unhelpful to both victims and the technology, to point the finger at blockchain. For the victims, it misdirects some of the blame from those who are actually responsible and keeps the truth of the situation from them, whereas the technology itself suffers from a negative view that it wholly unjustified, slowing the rate at which people will begin to trust it.

Going back to its inception, there is no record of anyone being able to hack the blockchain and this important fact should be kept in mind: you can trust the technology, just not necessarily other people, which is why bitcoin and blockchain was created in the first place. Fortunately, there are companies who are working on both methods to track bitcoin and identify owners, with some advocating KYC and AML methods amongst others. With education and exposure, hopefully misinformation will become less of a problem.

Matthew Warner
Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.