Bitcoin trading took a major hit this week when hackers struck at Hong Kong-based Bitfinex, one of the world’s largest bitcoin exchanges, where they absconded with a hefty sum of the digital cash. The value of bitcoin fell as word of the hack came out, but have since regained some of its losses.
According to Bloomberg, Bitfinex put a stop to all trading, withdrawals and deposits after discovering the hack on Tuesday. It has since cooperated with police in investigating the online intrusion, but was not at liberty to divulge how the attack was carried out and who might be responsible. What they were able to determine so far is that the hackers were able to steal bitcoins from some users of the exchange.
Bitfinex community and product placement director Zane Tackett confirmed to CNN that the hack was able to make off with a total of 119,756 bitcoins. Taken at current market value, the digital thieves got away with the equivalent of $65 million worth of real money.
The co-founder of another cryptocurrency trading platform, Fred Ehrsam of Coinbase, sent an email to Bloomberg with his opinion on the Bitfinex hacking. “It is a large breach,” he wrote. “Bitfinex is a large exchange, so it is a significant short-term event, although Bitcoin has shown its resiliency to these sorts of events in the past.”
For the moment, while lending assistance to police investigators and company experts in tracking down and recovering the stolen digital currency, Bitfinex is focusing on restoring its platform to full operation for the benefit of its users who would like to check their accounts to see if they have lost any bitcoins.
While the analysis is going on, concerns on the long-term stability of bitcoin and similar cryptocurrencies have resurfaced in light of the hack. And with the uncertainty came drops in the stock exchange, up to 15% of a loss. After the hack was publicized, one bitcoin went from a $650 value to $480, a 20% drop. Fortunately, the losses have since recovered, and the bictoin value climbed back to $550.
Still, some observers and bitcoin users couldn’t help but recall the downfall of another major bitcoin exchange, Mt.Gox, which filed for bankruptcy following a similar hack into its systems in February of 2014.
Bitfinex hopes to avoid that eventuality. Since 2015 it has partnered with another exchange, BitGo in Palo Alto, which utilizes a unique security feature to store its bitcoin deposits online. The partnership between the two platforms would have ensured that hackers trying to enter into either of their systems would have been forced to compromise both their systems before getting access to any bitcoins.
Photo Credit to bitnewz.net