Securities of cryptocurrency exchanges have been facing serious criticism, mainly because of the growing cyber attacks, which has caused losses amounting in hundreds of dollars. The recent attack of the Singaporean Crypto Exchange DragonEx is just one of numerous such incidents in the past couple of years.
In January 2018, popular crypto exchange Coinbase reported a 51 percent attack on Ethereum Classic which resulted in a loss of $1 million. Coincheck Exchange was attacked in the same month when hackers took away a jaw-dropping $530 million. Ironically, cryptocurrencies came into existence with a promise of safety and security. Therefore, such incidents cause severe damage to the credibility of the crypto space.
To tackle any such incidents, popular crypto exchange Kraken has decided to enforce two-factor authentication. Users on the platform already had the option for 2FA, but now it will be made mandatory, said Nicholas Percoco, Kraken’s Chief Security Officer, in a blog post on Tuesday. The feature has been available since the exchange’s inception in 2013, however, it was an optional one. Kraken is currently ranked 51st on the CoinMarketCap rankings.
The company has also incorporated the Kraken Security Labs. It will work on improving the security of the exchange’s in-house products, as well as the entire cryptocurrency ecosystem. The lab will perform vulnerability tests on third-party products, including hardware and software wallets.
The San Francisco based crypto exchange is committed to enhance the security of clients and industry at large, says Percoco. He informed the users through the blog that the company has already laid down a roadmap to improve security, the details of which cannot be revealed. However, Percoco urged users to take the necessary actions whenever they are asked to via notification. He also added that the exchange will continue to develop client-focused security enhancements in years to come.
The growing incidents of cyber attacks on various exchanges have forced governments and regulatory authorities to take serious efforts toward regulating the crypto market. Some countries have even taken steps to indirectly ban cryptocurrencies.
For instance, the Reserve Bank of India released a circular in April 2018, directing all banks in the country to refrain from serving businesses related to cryptocurrencies. Following the circular, banks stopped providing services to crypto related companies, which forced many of them to quit operation in India. Similarly, several countries including China, Vietnam, Argentina, and a few African nations have been extremely hostile towards the crypto space.
A market level research and development is essential to enhance security across the crypto space. The established crypto exchanges, which haven’t been attacked yet, like the Binance, the numero uno crypto exchange, will have to play a big role in market security. Vulnerable exchanges like DragonEx must seek assistance from Binance and other strongly secured crypto exchanges, to implement potent security systems.
The cryptocurrency market is expanding exponentially, and continue to grow at 122% in 2018, despite worst bears gripping the market. However, growth can be seriously hampered if concrete security systems are not put in place. Governments across the globe are closely monitoring the crypto space, and the slightest of shortfalls might invite the wrath of stringent regulations.
However, the future seems bright for the market, as business stalwarts like JPMorgan, TCS, Facebook, and IBM are entering the realm of cryptocurrencies and blockchain. This has brought the much-needed capital for research and development in the space, especially for security enhancements.
As Kraken is stepping in the right direction, other crypto exchanges must take motivation from this, and take measures aimed at improving security.