Binance got hacked yesterday – by now everybody knows that. I think it’s great thing for all concerned. This is why:
Binance got hacked and lost about 7000 BTC in a single transaction. From what I have read, the hack appears to have been carried out by a very patient and professional team. Viewed from my military background; I have to admire the planning and execution of the hack, which in no way means that I condone what the hackers have done. Au contraire – I look forward to watching them trying to spend or exchange that BTC further down the line, they are marked men…
Further basic information on the hack can be found here and in Binance Tweets.
(Note: I say “team” because this does not appear to be the type of hack that any one individual could have carried out alone.)
Binance is big
Perhaps too big.
While I admire the way in which Binance and its CEO have remained humble, it is my observation that too many crypto fans have been attributing an almost “godlike” status to the largest of the crypto exchanges. It has just been proven that Binance is not infallible. This acts as a reality check to the crypto community and may help to drive a little traffic towards underrated and underutilised exchanges.
Binance has flaws
This is not news to Binance, they’ve had issues before and have had to take preventative measures because of them. A hack like this points out further security issues and creates a more proactive culture that is better equipped to counter future threats. This drives the development of countermeasures and helps to create safer systems for all. I am sure that not only Binance, but also other exchanges will learn important security lessons from this hack.
It’s a reminder to the crypto community
Don’t store your funds on exchanges! Not your private keys, not your crypto!
Never forget that!
It’s an argument in favour of DEXs
Like the above point alludes to, your funds are safest when only you have access to them. DEXs are the future. While I believe that there will probably always be a need for some form of exchange centralisation, especially to assist people who are now to crypto, DEXs are going to be the dominant crypto exchanges of tomorrow.
Binance knows this and they already have their own DEX. Nash Exchange is coming soon. Older (but less capable) DEXs like IDEX have been around for a while already. The more these DEXs get used, the better for all of us. The hack of a centralised exchange drives people towards the relative safety of DEXs.
Binance did a GREAT job!
I am very proud of Binance for the way in which they handled the hack. The whole hack has been dealt with in a relatively transparent manner. This is a mature way to handle things and it is the correct way to handle things. Contrary to what some believe, people are remarkably good at NOT panicking when they are told the truth and kept informed. This is in stark contrast to the BitFinex/Tether issue of the recent past, where Tether funds were used to cover up BitFinex losses (albeit through a complicated process of swapping assets which may or may not be worthless).
Not only that, but Binance implemented a contingency fund known as “SAFU” (Secure Asset Fund for Users). SAFU will be absorbing the approximately $40 M cost of this hack. It’s amazing to think that a crypto exchange keeps extra funds to protect its users. Contrast this with the banking system which keeps far less funds that what it has on its books. Which system is serving its clients better?
By doing what it has just done (including rejecting some form of blockchain reorganisation), Binance has just shown the whole world how safe and stable cryptocurrencies are becoming. This is a major boost for crypto and the long-lasting effects of it should not be underestimated! We will all benefit from Binance’s good planning and equally good crisis management. Imagine if politics worked this way – what a wonderful world it would be!
The market didn’t crash
Binance has come a long way, but so has the maturity of crypto investors as a whole. After surviving the worst bear market in crypto history, those of us who have been here for more that a year are not easily panicked. Only the weakest of hands panicked at this news, and were soon countered by the positive sentiment of the increasingly bullish market. We saw a similar non-reaction to the Tether/BitFinex saga only a few days ago. With volume and bullish movements increasing, this is a very positive lookout for the medium and long-term cryptocurrency market.
Perhaps it won’t take so long for us to break through that $6k – $6.5k resistance after all, I hope those with open BTC Shorts are getting afraid! The hack of the worlds biggest crypto exchange only caused a 4% drop in BTC price, which soon corrected, leaving BTC now about 1% lower than pre-hack prices (at the time of writing). Similarly, BNB (Binance’s native coin) was hardly affected by the hack:
Bitcoin price – the effect of the hack: (4% loss)
Bitcoin price – latest data: (1% loss)
BNB – no lasting ill effects:
Just like when Craig Wright targeted @hodlonaut, the crypto community has once again rallied to help fight a threat against one of its members (thereby indirectly helping itself). The wallets that the hacked funds were diverted to have been tracked and are being blacklisted by “many” exchanges.
I am proud to be a member of a large community that stands up for its individual members and which acts as a cohesive unit when threatened by any outside entity. Once again it’s good to see that we can put our differences aside and stand united against threats whenever we need to. Life experience has taught me that few things are stronger than a competent, cohesive team. Such teams are (sadly) very rare and we should all be honoured to be a part of this one. I can’t think of any other community on Earth which is both as large and as cohesive as what our global crypto community is. Unity is strength.
This was a zero-loss situation. In fact, we may consider it a win for us all.
Binance handled things really well and this will go a long way to bolstering their already sterling reputation. The hacked funds will be made up for in time by the transaction fees of many users who feel safe enough to use their platform(s) regularly. In the long-run this is a financial win for Binance.
Other exchanges will benefit from a little business as people explore alternatives to Binance. This seems to counter the paragraph above, but the truth is that in the growing cryptospace, there is more than enough business to go around. As usual, I strongly suggest using KuCoin as a Binance alternative. (Referral link in my signature.)
The crypto community wins as outsiders see how well this situation has been handled. This is exactly the kind of mature behaviour required to get large investors aboard. Adoption obviously benefits all of us.
The hackers have also won – for now. Those guys are about to find out what “paranoia” and “insomnia” really mean!
The only real downside I see from this is the temporary shut-down of Binance deposits and withdrawals as they check the security of their systems and plug any holes. I consider this a small price to pay.
Seeing how well they handled this, I feel justified in having named BNB as one of my “coins to buy at any price” and I’m more bullish about the future of crypto than ever before! Surely BNB is a much safer and more profitable option than any major stocks during a US/China Trade War!
Yours in crypto
All charts made by Bit Brain with TradingView
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain