Theft Will Rise Amid Cryptocurrency Fever – Digital Security CTO

Japanese cryptocurrency exchange Coincheck Inc is set to repay nearly 425 million dollars it lost of its clients' money. In a talk with Sputnik, John Lloyd, Chief Technology Officer at security firm Casaba, notes that while the step is a welcome one, thefts are a natural outcome of cryptocurrency operations.

John Lloyd: The original Satoshi paper was designed to facilitate cash transactions between untrusted people. What happened is that now it is essentially untraceable: you are going to see theft rising as it becomes more and more popular.

Sputnik: Have we seen any serious implementation of new technology to counter thefts since the infamous Mt. Gox hack?

John Lloyd: I think that the biggest change starting this year is increased regulatory focus. Whether in countries like the US, Korea or Japan, where the regulator is forcing people to comply, in countries like Singapore, where I stay, the government is kind of hands-off, but is letting the industry to self-regulate, and the technology isn’t really on the blockchain side, it’s on the exchanges in all their maturity.

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About around the time of Mt. Gox when I was selling Bitcoin, half the time I had to go and sell it to somebody in person. All of the exchanges were quite a bit of the Wild, Wild West. We don’t see these much anymore now that you have exchanges like Coinbase, exchanges like Bittrex <…> behaving more or less like more traditional investment exchanges, and I think they are quite interesting.

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Sputnik: What can you say about the latest hack on the Coincheck Inc? They are pretty good about making a decision to repay the lost sum.

John Lloyd: There are two stories going on right now: Mt. Gox agreed to pay back around 420 million just yesterday, what it was working on. I think it’s absolutely correct. If the industry is to have any sort of accountability, any sort of transparency, its exchange providers need to be liable. I think it’s a great step forward for them to try to pay back and try to help their users recoup their losses. Much in the same way as if you are using a dollar denominated or a euro denominated, or a ruble denominated asset, you have some sort of protection from the Federal Reserve or whatever monetary authority.

The views and opinions expressed in the article are those of John Lloyd and do not necessarily reflect Sputnik’s position.

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