Anyone who stored their bitcoins at the enormous Hong Kong-based bitcoin exchange platform Bitfinex will have to share in the losses that resulted from the bitcoin market’s recent cyber-attack.
Following the hack, all Bitfinex users were alerted that they will lose 36% of their assets. Bitfinex allegedly lost up to $65 million worth of bitcoin during the attack.
“Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%,” the company stated on its website. “We have decided to generalize losses across all accounts.”
The firm added that it would be offering more in depth information regarding how that particular figure was reached soon. Customers were also assured that they would receive a “BFX token” that would be equal to their personal losses. These tokens will eventually be exchanged for repayment by Bitfinex when the company is able to get back on its feet. The tokens will also be exchangeable for shares in its parent company iFinex Inc.
According to Bitfinex, a total of 119,756 bitcoins in total were stolen by hackers. It was the first major attack to hit the platform since May of last year, when 1,500 bitcions were stolen.
This attempt to “socialize” the losses suffered from the attack may have a negative impact on the validity of all digital currencies, as explained by Cornell Universtiy’s Emin Gun Sirer.
“Anyone who holds any asset at any exchange realizes they’re part of the insurance plan for others,” he said.
Bitfinex is by no means the first bitcoin exchange platform to be hacked. A major crisis in the value of bitcoins as a whole followed a brutal cyber attack carried out against the Mt. Gox exchange, which was forced to declare bankruptcy in 2014.
After news broke that Bitfinex has suffered major losses at the hands of malicious hackers, the value of bitcoin fell by an astounding 20%. It has since rebounded slightly, but as usual after a major cyber attack, bitcoins as a concept have been thrown into question.
According to Professor Alan Woodward from the University of Surrey, the “vast majority” of people with bitcoins held them in exchanges and online wallets. “It’s a bit like your bank account having money taken from it and then your bank writing to all customers saying it will spread the losses across all of them,” he explained.
Clearly it’s not the most encouraging banking system out there, especially for a currency whose very philosophy is unprecedented and whose value has suffered rough patch after rough patch in terms of stability.
That said, the anonymous currency will likely never die out completely; it’s too important for dark web users, black market patrons, and ransomware makers to ever be allowed to go out of commission entirely.
That said, there are other cryptocurrencies that may rise to take the bitcoin’s place. People are excited about the newest currency, Ethereum, which is also traded at Bitfinex and is rapidly gaining on the bitcoin.