Binance came to a halt yesterday when there were rumours of Syscoin’s Blockchain being compromised. However, it came back online an hour later because there was no risk to exchanges and they reset the API keys as a precautionary measure. Every few weeks, there is a new story of an exchange hack.
The blockchain has always been fool-proof. Bitcoin has been around 10 years now and its network remains unchallenged. However, the biggest weak-link of blockchain is the humans that use them. Centralised exchanges are responsible for user funds and when these exchanges do not follow proper security practices, it is the customer funds on line.
When Coincheck was hacked, nearly $550 million worth cryptocurrencies were stolen because the exchange was careless enough to store all that money on an online hot wallet. It just made things easy for an external hacker to access the funds. However, there are also instances where too much control was given to a single person in the company and that person turns into a bad actors.
Exchanges have to constantly prioritise security in the world of cryptocurrencies, because once the money is gone, it is gone forever. Binance has had one of the best track record when it comes to protecting customer funds. When there was a scare of a potential hack a few months back, Binance announced that they’d be building a decentralised exchange with smart contracts, completely powered by Binance Coin.
With yesterday’s hack Binance announced another initiative: Secure Asset Fund for Users (SAFU).
SAFU will store 10 percent of all trading fees to cover losses in an extreme situation of the exchange being hacked in future. This fund will be stored in a separate cold wallet separate from the wallets used by the exchange for everyday purposes. Binance has also announced that 70% of the fees paid between July 5 – 14 will be return back to users in the form of BNB tokens.
— CZ (@cz_binance) July 4, 2018
Binance Coin (BNB) remained relatively stable throughout the incident. BNB is now priced at $14.1, gaining 0.57% in the last 24 hours and has a market cap of $1.6 Billion.