Should I Trust Binance?

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October 2, 2021

Binance lost $40 million worth of Bitcoin in the result of hackers’ interference. The digital currency boasts for its security and here is the reality. Binance is one of the platforms to trust in crypto transactions. It is based in Taiwan and wraps a huge number of active users. Hackers managed to withdraw about 7,000 Bitcoins in one single transaction. The professionals used different methods and phishing and viruses are just some of them. The matter is if that happened to Binance, it might happen to any platform.


Binance customers don’t incur any losses


When the hackers attach took place, Binance stopped withdraws and deposits for certain period of time. What concerns customers, they did not personally have any losses. The Binance company has an emergency insurance fund. ‘Secure Asset Fund for Users’ has existed since July 2018 and it was used to cover the losses. That’s one of the greatest characteristics of the giant exchanges. Customers are under protection even in the extreme cases. However, this case worked as a warning signal to the whole community of crypto investors. Digital money can be not that safe as they might think.


How did the hackers manage to steal 7,000 Bitcoins?


Binance announced the statement about the case. It runs that hackers had user API keys, two-authentication codes and other important data to steal the digital funds. They managed to withdraw 7,000 Bitcoin in one transaction only. Binance explained how ‘hot wallet’ and ‘cold storage’ played their roles in the hack. ‘Hot wallet’ is connected to the Internet and it is used to exchange Bitcoins.

Binance stated that there were only 2 percent of its total Bitcoin holdings in it. ‘Cold storage’ is used to keep digital money offline. Luckily, the rest of digital money was in the secure place. If the number of Bitcoins in ‘hot wallet’ were higher, the hackers would enjoy a bigger sum of the roll.


Why Bitcoin exchanges are hackable?


Crypto experts have a lot of discussions on the topic of Bitcoin exchanges. Bitcoin is a secure system, but users need to understand the two major aspects of its security. These are the blockchain technology and the way digital money is stored and transferred. Blockchain is a secure and safe system. It allows anyone to make transactions if he has the keys that match Bitcoin in a particular address. The records about the transfers are immutable. If only you have the keys, it is all safe. However, when you hand them over to the exchange or a wallet for storage, then you can’t control it. It’s under the responsibility of the organization to provide a cyber secure system to keep your funds safe. It’s up to you to decide whom to trust.


The anonymous nature of Bitcoins


It isn’t possible to get back the cryptocurrencies after the hack. It’s one of the greatest features for Bitcoins that attracts hackers a lot. We all know that Bitcoins major principle is anonymity. So the hacker is anonymous as well as its previous owner. The hacker steals Bitcoin from the exchange and then he has a line of random letters and numbers attached to him. No one can ever find out who this hacker is.

Different countries are under various restrictions that relate to the exchanges policy. For instance, in the USA the FBI fight against thieves and illegal usage of cryptocurrency. Each crypto users should understand that investing is a risky matter especially when it’s crypto inverting. When you make a choice on the exchange either Binance or any other, you need to be aware of all the possible scenarios for the future of your funds.

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