Average Crypto Exchange Lifespan Is 18 Months Due To Hacks And Government Intervention
- Crypto exchanges operate in the market an average of 18 months
- Hacks and attacks have affected the reliability of these platforms
- Although the number of cryptocurrency exchanges has been expanding all around the world, there are several platforms that have been affected by hacks or attacks, leading to several companies to shut their operations down. Having stable virtual currency exchanges is very important to improve the market’s stability and the expansion of virtual currencies.
Crypto Exchanges Shut Down
According to data provided by Yassine Elmandjra, a cryptocurrency analyst working at ARKinvest, the average lifespan of a crypto exchange platform was only 18 months. Several cryptocurrency hacks and mismanagement have ended with virtual currency exchange platforms.
Until now, over 50 crypto exchanges had to stop offering services to cryptocurrency users. The most popular platforms that stopped operating might be Mt. Gox and Coincheck, among others. Since 2019 started, 9 exchanges have already shut down in the market.
The exchange platforms that stopped offering services to users this year include Coinome, Coinpulse, Coinnest, Coinroom, Liquid Exchange, QuadrigaCX, Cryptopia and Gate Coin. Cryptopia, for example, was affected by a hack earlier this year. The exchange lost several million in funds from users and they couldn’t recover since that moment.
Clearly, when a crypto exchange stops operating, the community starts asking many questions regarding the safety of the space and how it is expanding around the world. Exchanges tend to make several mistakes when protecting users’ funds and sometimes, their platforms have bugs, which make them vulnerable to attacks.
Exchanges are a very attractive target for hackers because they hold several thousand or millions of dollars in users’ funds in just a few wallets, and some of them might be connected to the internet, which makes them vulnerable to these attacks.
A few weeks ago, the cryptocurrency exchange Binance, one of the largest and most popular platforms in the space, was attacked by hackers. The platform lost over 7,000 BTC worth $40 million at that time. Although the platform could deal with the losses – they have a contingency fund – it raises many questions regarding the security that top exchanges have to protect users’ funds.
These attacks are also affecting the space because many larger investors do not feel safe investing funds in an industry that does not protect users’ funds as it should. This is why there are some companies such as the Intercontinental Exchange or Fidelity Investments that are working on crypto custody solutions for larger investors not to be worried about their funds and how they are protected by an unstable crypto exchange.