Bithumb, the South Korean exchange that was attacked again last month, announced that it lost $180 million in 2018. According to local media reports, the exchange was suffering from the decline in trading volume and the cryptocurrency bear market effect.
However, Bithumb said that its operating conditions have improved in recent times:
- Uncontrollable burden, Circle will transfer the exchange business overseas
- Bank of Korea strengthens monitoring of anonymous transactions in cryptocurrencies or related to new FATF regulations
- Koreans don't love Bitcoin anymore? Trading volume of the two major exchanges fell by nearly 70%
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Trading volume has increased by 17%, and we are also increasing overseas investment.
A series of questions made Bithumb big
Bithumb has had a tough year. It lost $19 million in internal employee theft last month and was hacked in June last year (this is not the first time it was attacked), and $30 million has disappeared.
At the end of last year, there was another report that the company's trading volume was doped with water. In January of this year, Bithumb also fired many employees when the market was at its worst.
How much does the price of cryptocurrency affect the exchange? A fee is charged for each transaction generated on the exchange. If the exchange charges a fee based on a cryptocurrency, then the currency will definitely affect the profitability of the exchange as long as it falls.
Some have speculated that Bitumum's financial problems have been exacerbated by the attacks it suffered last month. The relevant findings have not yet been announced, but the information currently known is that all stolen funds belong to the exchange, not the users. This point indicates that this theft was committed by insiders.
When will the decentralized exchange come?
The theft of exchanges such as Bithumb, Cryptopia and QuadrigaCX has made users increasingly looking forward to the arrival of decentralized exchanges. At this stage, there are many decentralized exchanges that are still in the early stages of development, with more or less problems. In addition, unmanaged class solutions are constantly coming out.
However, unmanaged class solutions also face some challenges. Often, users who choose such a program must be more experienced than others and learn more. In addition, there is a problem with the insurance coverage of such exchanges – if a company cannot fully control the funds traded on its decentralized exchanges, it is more likely to encounter legal problems. Etherdelta was the first and largest decentralized token exchange on the Ethereum blockchain, which was punished by the US federal government last year.
For traditional exchanges, decentralized exchanges are a threat to their dominance, but users are always inclined to choose platforms that are more convenient, more transactional, and capable of high-frequency trading. Running an exchange on a blockchain such as Ethereum or Bitcoin sometimes results in transaction costs that are much higher than the transaction costs at the centralized exchange. For traders who conduct thousands of transactions every day, the cost is not what they can afford, which is one of the reasons why the traditional exchange model still exists.