How to Secure Bitcoin Exchanges, or Why All Hope Is Not Lost

Last week’s
Bitfinex

hack, in that Bitcoin’s heading sell mislaid roughly 120,000
bitcoins valued some $70 million USD during a time, represented a
depressing fulfilment for a Bitcoin community. Where many had
hoped that multi-million dollar hacks and detriment of business funds
were a thing of a past, it became transparent that storing bitcoins on
an sell is still not as secure as it maybe should be. In an
industry first, Bitfinex imposed an

Extraordinary Loss Adjustment

on all patron funds; re-opening balances this week uncover a cut of
about 36 percent per account.

But a penetrate also served as another wake-up call. Moving
forward, several technical solutions are being due to increase
security of Bitcoin exchanges, to hopefully forestall similar
scenario’s in a future.

Here is a brief overview of some of these possible
solutions.

Multisig

As of yet, it’s not accurately transparent what caused a Bitfinex hack.
What is clear, is that a multi-signature set-up with
BitGo

to secure patron supports unsuccessful to yield any suggestive security.
In theory, both Bitfinex and BitGo’s servers should have indispensable to
be compromised in sequence to take any money. But in practice, BitGo
seems to have co-signed any and



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