Archive: September 1, 2016

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Bitcoin operators exposed to cyber threats
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The politicization of encryption: party “platforms” or “platitudes”?

Bitcoin operators exposed to cyber threats

By Cameron Abbott and Rebecca Murray

Reuters has reported that a third of bitcoin trading platforms have been hacked, and nearly half have closed since they entered the scene 6 years ago. This increasing risk for bitcoin holders is compounded by the fact there is no depositor’s insurance to absorb the loss. That approach heightens cybersecurity risks and also exposes the fact that bitcoin investors have little choice but to do business with under-capitalized exchanges.

This issue was evident when Bitfinex was hacked earlier this month and an estimated $70 million in bitcoin was stolen. The virtual bank’s customers were forced to share the losses resulting in a generalized loss percentage of 36.067%. Read our blog post on this hacking here.

Experts say trading venues acting like banks such as Bitfinex will remain vulnerable. These exchanges act as custodial wallets in which they control users’ digital currencies like banks control customer deposits. However, unlike their brick-and-mortar counterparts, when customers’ bitcoin accounts are hacked, there is currently no third party that can step in to deal with the theft. As a result, these underfunded exchanges require nearly perfect security.

Given this it is not surprising that certain governments around the world are exploring the possibility of central bank issued digital currencies using distributed ledger technology which could compete with the private digital currency systems such as bitcoin. Read more on this here.

The politicization of encryption: party “platforms” or “platitudes”?

By Tyler Kirk

In the United States, the political stage is set for what may turn out to be one of the most infamous presidential elections in America’s history. As noted in an earlier blog post, the regulation of encryption by U.S. legislators and regulatory agencies may have a damaging impact on FinTech, and in particular, on the adoption of blockchain and other distributed ledger technologies. In this post, we look at the relevant Party Platforms to learn what, if anything, they say about encryption.

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