The Bankwatch

Tracking the consumer evolution of financial services

Hong Kong-based Bitcoin exchange Bitfinex customers lose 120K BTC

Bitcoin reporting continues to be as vague as the average persons understanding of Blockchain. Nonetheless this loss will be closely followed. The last big loss was 2 years~ ago at MtGox in Japan, and that resulted in the exchange being shut down.

Following MtGox closing in bankruptcy, here are the reasons according to Wired:

But on the inside, according to some who were there, Mt. Gox was a messy combination of poor management, neglect, and raw inexperience.

So Coindesk are doing no-one any favours by attempting to deflect the Bitfinex loss with a mid article shift to a discussion about Bitcoin mining activity and that effect on Bitcoin prices. Interesting but not the point.

The issue is security of the Blockchain and why this new loss occurred, apparently related to social media, but with no details. Maybe this loss is something to do with phishing or someone using the same password across multiple sites. Whatever the cause it is important to elaborate very quickly if confidence in Blockchain activities is to be established. This quote hidden in the Coindesk article is critical.

Market observer and trader Jacob Eliosoff provided similar input, telling CoinDesk that the event had sparked a new wave of uncertainty.

“The big question will be how much was stolen and whether Bitfinex will make customers whole,” he said.

No-one loses money with online investing with their bank and there is a reason for that. Blockchain has many advantages, but confidence will always come back to the institution involved, and not the encryption methodology; this is entirely due to the human component, which is an unfortunate reality.

Written by Colin Henderson

August 3, 2016 at 00:35

Posted in Uncategorized

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