Hacking on centralized exchanges and how DAEX can prevent these frequent attacks

Hacking on centralized exchanges and how DAEX can prevent these frequent attacks

Centralized exchanges have long been the main target of hacker groups. It seems that this has already become a weekly event - thieves gain access and steal money from these individuals, these amounts vary from small to large, reaching as many as hundreds of millions of dollars.

Like a bank, these centralized companies fully control the funds at the moment when the trader makes a deposit on the exchange. They also act as clearing organizations that provide reconciliation of orders, clearing and settlement services. With this infrastructure, traders must fully trust the exchange to not only keep their assets safe from both external and internal threats, but also facilitate the process of concluding transactions. Hot wallets, which they use to store digital assets of their customers, and allow to make similar attempts of breaking.

The latest hacking occurred this week in Bithumb, where about $ 31 million of crypto-currency was stolen. During the attack, Bithumb ranked sixth in the world in terms of trading volume in 24 hours. The South Korean exchange is one of many centralized exchanges that have been the victim of such hacker attacks.

The tweet sent by Bithumb shortly after the attack advised clients not to deposit deposits on the exchange. 
Coinrail also suffered from hacking earlier this month, more than $ 40 million of its crypto currency was stolen, including $ 19.5 million of Pundi X (NXPS) tokens, $ 13.8 million of Aston X (ATX) tokens, 5.8 million million $ Dent (DENT) tokens and $ 1.1 million of Tron (TRX) tokens.

Without changes in the basic infrastructure of these exchanges, similar incidents with hackers will continue to occur. Many believe that the decision to prevent these security threats is the use of decentralized exchanges as platforms for trade. Decentralization is the goal of the crypto-currency trade community, so using the "blockchain" technology (distributed registry) to facilitate transactions is entirely logical. However, the existing decentralized exchanges are not so widespread in the world of traders for several reasons.

They do not allow exchanging Fiat for the currency (currently they support only crypto / crypto exchange), which is an important factor for entry-level traders who want to deposit or withdraw Fiat using their credit / debit card. With a smaller audience of users, the volume of trade in crypto currency is usually very low. With low liquidity, markets can become volatile, resulting in prices becoming unstable - especially when traders place large orders. Decentralized exchanges support only the main trading functions. They do not have enough advanced trading functions, such as margin trading, a loss protection order and limit orders. Their user interfaces, as a rule, also leave much to be desired, which further complicates the process of the trader getting used to the platforms.

The DAEX solution is, in fact, a platform that shares the digital assets registration, reconciliation, clearing and asset settlement in a decentralized manner. Currently, exchanges provide all these services in a centralized environment. By joining the DAEX site, the exchanges will not have full control. Traders will own their assets and access them through DAEX wallet using their personal / private key. This wallet will provide access to any exchange that is part of the platform. Traders will be able to benefit from several advantages offered by currently centralized exchanges, such as expanded trading functions, high liquidity, operations from Fiat to the crypto currency, and much more.

Clearing of transactions will be carried out through DAEX, which is a separate clearing chain using distributed registry technology and smart contracts. It is the main product of the DAEX platform. Thus, centralized exchanges that join the platform will be able to focus on their core competencies and areas that help develop their business. This will give them a competitive advantage in the market, because they will not need to spend resources on creating a system for storing the assets of their customers (which in any case will be vulnerable to attacks). They also will not need to create transaction mechanisms, which include clearing and settlement of transactions. Instead, DAEX will provide these services in a safe, transparent and transparent way.

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Author by: Naomikatarina
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