Every year, the number of cryptocurrency exchanges that are hacked increases. According to SlowMist Hacked, a total of $6.4 billion AUD have been lost to exchange hacks, with 6 known hack events occurring in just 2021 alone.
Why should you think twice before leaving your cryptocurrency in exchanges?
The blockchain and cryptocurrency is often referred to as ‘unhackable’ and ‘secure’. But this does not mean that cryptocurrency exchanges are the same. The blockchain is a database and record of crypto transactions. It is often referred to as ‘unhackable’, as hacking a blockchain is almost impossible because it requires the hacker to gain control of at least 51% of the blockchain network’s mining power which verifies the validity of a transaction.
On the other hand, exchanges are not the same. It can be dangerous to leave your cryptocurrency in exchanges, simply because cryptocurrency exchanges are prone to human error and cyber attacks. Exchanges are vulnerable to the same security issues as any other website. Mismanagement, scams and employee errors can all lead to system breaches and a loss of funds, leaving users with their wallets on the exchanges empty and unrecoverable.
‘Cryptocurrency itself is secure. It’s the exchange that is the problem.’
Mortaza Tollo- CEO & Founder of Elbaite exchange
A well known example is where the owner of QuadrigaCX passed away with the private keys (wallet passwords) to the exchange’s wallet, leading to an alleged loss of access to users assets worth $190 million. Many other instances of employee errors have also led to exchanges losing users’ cryptocurrency either through error or incompetence.
‘By 2017, I had been affected by exchange hackings four times. Each time I lost Bitcoin, Ethereum or my mining rewards, which would have been worth hundreds of thousands of dollars today‘
Tollo
Furthermore, once exchanges are hacked, it is extremely difficult and often times impossible for the cryptocurrency to be recovered, meaning users lose their money and investments.
What is a non-custodial crypto exchange?
A non-custodial crypto exchange is an exchange that does not hold user’s cryptocurrency. Users have full control and complete custody of their cryptocurrency, crypto wallets and keys.
Elbaite is Australia’s first truly non-custodial cryptocurrency exchange, which enables buyers and sellers to trade directly between each other right from their own cryptocurrency wallet and Australian bank accounts. It is the first of its kind in the world employing blockchain verification, and escrow accounts in a unique combination to enable direct peer-to-peer transactions on the blockchain.
Furthermore, Elbaite’s escrow trading means that the buyer’s money will not be paid to the seller until it is verified on the Blockchain that the seller has sent the cryptocurrency to the buyer’s wallet. This ensures that sellers are always paid and buyers always receive their crypto.
Why are non-custodial crypto exchange more safe and secure?
Non-custodial cryptocurrency exchanges do not hold cryptocurrency. This means that sellers directly send cryptocurrency to the buyer’s wallet address, bypassing the exchange entirely. This alleviates the risk of cryptocurrency being held within hackable exchanges, increasing safety, security and simplicity of transactions.
Furthermore, non-custodial crypto exchanges allow users to retain full control and freedom over their crypto assets and where best to store the crypto.
‘In mid 2017, I was motivated to find a solution. Inspired by the Bitcoin whitepaper, Elbaite was founded and takes inspiration from the P2P spirit of Bitcoin.‘
Tollo
Elbaite is the cryptocurrency exchange designed for Australian traders seeking safety, security and simplicity.
Disclaimer: The information on this website and article are purely for informational purposes only. Elbaite is not a financial adviser, and nothing stated here is to be taken as financial advice. You should seek independent legal, financial, taxation or other advice relevant to your financial situation before making any investment decisions.
