Can Blockchain Prevent the Hacking of Crypto Exchanges?

Americans are more worried of having their information stolen by hackers than they are about being murdered, sexually assaulted or robbed, according to a Gallup poll. This fear has been rapidly spreading across the world since the start of the Internet era. More and more people are beginning to rely on their digital devices, with their personal information and assets stored online. This dependency does not bode well with the recent high-profile data breaches such as those in the Equifax and Cambridge Analytica scandals. It has become clear that centralized systems no longer protect the public moving forward.

Enter blockchain technology, giving people a glimmer of hope. With the promise of removing the trust involved in storing and accessing digital content by operating on consensus, blockchains held the promise that their platforms are hackproof and for the most part blockchains are extremely secure.

Then, the unexpected happened: Coincheck and Coinrail got hit by hackers. When it takes hackers a short amount of time to gain access to the systems of exchanges and to steal $731 million worth of cryptocurrencies, because in the most part they are still operating on centralised systems that are easier to gain access to. Users now asking: how secure are exchanges? The real question should be why all exchanges aren’t built on a decentralised blockchain platform, that would reduce the incidence of these attacks.

In an interview, Coincheck did not seem to know how the hacking occurred and refused to admit that its security was weak. Coinrail admitted that it did not have enough resources and experienced developers to fix and improve its security system. The excuses only enraged the public further, leaving them to wonder if nothing can be secure.

Can Hacks Be Prevented in the Future?

To answer the question, there is no guarantee that all hacks can be avoided, but by exchanges moving towards a more decentralised model i.e. being built on blockchain platforms, where well-constructed code is vital, the occurrences can be reduced. Countries like Japan and South Korea have already started applying strict policies to establish industry standards regarding cryptocurrency exchange security, but the burning question is why only make it difficult for hackers to steal funds, when with the use of blockchain technology it is virtually impossible

With stricter regulations, more experienced developers behind the scenes and employing stronger cryptography, with Blockchain technology allowing for decentralized exchanges with greater security and privacy, it can be made more difficult to hack a network and the number of security breaches will to drop.