Since exchanges operate in the cryptocurrency market they have been affected by attacks and hacks from different parties. This has been one of the major problems faced by the crypto industry as a whole due to a large number of funds lost by investors around the world.
According to a recently released report by Bank Frick, the number of reported crypto thefts has been decreasing since 2011. Exchanges have been very important for the whole cryptocurrency market during the last years. They helped individuals from different countries to have access to digital assets through their smartphones or computers.
There are some reasons that could be related to this improvement in the number of attacks to exchanges in the space. For example, after many hacks experienced by different platforms, security improved in most of them. That means that the industry learned from their previous mistakes, although they harmed many users in the market.
At the same time, another reason related to the improved performance of exchanges could be due to the increasing number of institutional-grade custodians that protect users’ and exchanges’ funds. Thus, exchanges and investors are now better prepared to safeguard user deposits.
The report shows that the number of attacks tends to increase when the market expands in short periods of time. This is due to a larger number of newcomers entering the space and investors placing their funds in the market.
Although the number of hacks increased, if they are compared with the growth in valuations and users, the incidents fell. For example, back in 2011, close to 0.005 percent of the total Bitcoin supply was lost due to hacks. In 2018, this number fell to almost 0.
The number of incidents per year remained stable in 2017 and 2018 but registered an increased compared to 2015 and 2016. The worst year was 2014 with over 8 incidents affecting the space. As the number of active exchanges increased over time, the incidents divided the number of exchanges reached the lowest point since 2015.
The report reads as follows:
“The decline in affected venues is quite remarkable, leading us to conclude that the turbulent times are over – not since watchdogs started paying attention, but since 2015. One interpretation of this is that the early hacks served as warning sign, causing the industry to place greater focus on security.”
This shows that the first attacks and hacks warned companies in the space about what could happen if they do not improve their security.