Is cryptocurrency safe?

Amid all these controversies and theft, one is left to wonder whether cryptocurrencies are safe. People have been investing their life savings into cryptocurrency exchanges, with some going as far as selling everything they own to invest in bitcoin and other cryptocurrencies.

August 3, 2016 – More than $60 million worth of Bitcoin stolen from world’s largest cryptocurrency exchange, Bitfinex.

July 20, 2017 – More than $32 million worth of Ether was stolen from a famous cryptocurrency wallet, Parity.

November 8, 2017 – More than $300 million worth of Ether lost in the Ethereum Network, possibly forever, due to negligence of a developer and some loopholes in the systems.

November 21, 2017 – More than $30 million worth of dollar-pegged Tether currency stolen from the Tether network due to a brief security loophole in their system, which allowed an external attacker to access the system.

Amid all these controversies and theft, one is left to wonder whether cryptocurrencies are safe. People have been investing their life savings into cryptocurrency exchanges, with some going as far as selling everything they own to invest in bitcoin and other cryptocurrencies.

Earlier this year, news from the Netherlands told a story of a family who sold their house and all their assets to invest it all in Bitcoin. They believed that there would soon be an ultimate cryptoboom that they would stand to profit from. However, incidents such as the Tether theft put a dark stain on the cryptocurrency market, making it seem unsafe for investments. Tether is releasing new security patches to prevent the stolen tokens from being introduced back in the market. Tether will reimburse the stolen tokens.

In response to the incident, Tether released a statement:

"$30,950,010 USDT was removed from the Tether Treasury wallet on November 19, 2017 and sent to an unauthorized bitcoin address. As Tether is the issuer of the USDT managed asset, we will not redeem any of the stolen tokens, and we are in the process of attempting token recovery to prevent them from entering the broader ecosystem."

In response to the hack, exchanges such as Huobi and OKCoin have frozen Tether trading in order to prevent further controversies. The trading will resume after getting an update from Tether and ensuring that the tokens will not be flushed back into the market. Effective security measures are required to ensure that such incidents stop otherwise, it is only a matter of time before the trust in online cryptocurrency exchanges vanishes due to their inability to protect the investments.