Key Takeways

  • Crypto hacks like Mt. Gox, Bitfinex, Cryptopia and Coincheck pose a real risk to investors
  • As a result, many investors choose to keep their capital out of the crypto market, limiting liquidity and growth
  • Trading crypto on a regulated stock exchange with 100% insurance could provide them with the confidence they need to dive in

What do crypto exchanges Mt. Gox, Cryptopia, Coincheck and Bitfinex have in common? They were all hacked, burning investors for millions of dollars.

Even service outages or slowdowns caused by scheduled maintenance can spark fears of a hack, as happened with the Coinbene exchange earlier this year.

When crypto exchanges get hacked, the consequences can be disastrous. 2018 in particular was the year of the bitcoin heist, with an average of $2.7 million per day and $865 million overall stolen through hacks.

2018 also witnessed the largest crypto hack in history, as Coincheck confirmed its loss to be larger than the infamous attack on Mt. Gox.

And up until recently, there hasn't been enough bitcoin insurance to go around. What’s a crypto investor to do?

Top tips to survive the next bitcoin hack

Is bitcoin safe? Can bitcoin be hacked? Is there a way to stop playing bitcoin poker and remove the gamble crypto of hacks for investors?

For those who are banking on bitcoin, options include:

  1. Hot wallets

Hot wallets are services (often provided by the crypto exchange itself) that store your crypto and private keys online. They make it easy to access, withdraw and spend your money when you need to, but are vulnerable to hackers.

Common practice is to store only a small amount of money in your hot wallet, minimizing your risk exposure.

Investors should do thorough research on the available hot wallet providers before selecting one, looking for their security policies, reputation, and track record against cyber threats.

  1. Self-Managed Cold wallets

    Also known as cold storage, cold wallets work by keeping your crypto and private keys off of the internet entirely. They come in many forms - think anything from a QR code printed on paper to expensive, specialized thumb drives like the Ledger.

    Staying offline means they are extremely safe, but that also makes it difficult to access your coins when you need them. Cold wallets are best for storing large amounts of crypto that would be too large a risk for hot wallets.

Or, crypto investors can cut out the middleman and:

  1. Trade crypto in an insured, regulated environment

    Mainstream investors don’t worry about whether or not the stock exchange is going to be hacked, or how to get their money out when they need it. Traditional financial institutions make investing predictable, stable and safe for investors with established procedures and, above all, insurance.

    (Federal deposit insurance covers money in everyday bank accounts, while private insurance covers money invested through brokers.)

    One such option for Bitcoin and Ether is Blockstation, a Canadian fintech that has developed the world's first trading platform that works with traditional institutions.

    We integrate with stock exchanges, regulators and licensed investment brokers, keeping your assets safe in a multi-signature cold storage vault. Think security, liquidity, direct bank transfers, all on an easy to use platform and the ability to cash out with end-of-day settlement of all transactions.

Beat the next crypto hack

So between cold wallets, hot wallets, tons of research, and insurance, which option to trade crypto and beat the hackers is best for you, and why? Let us know on social media using the hashtag #blockstation.

Happy trading!


This content is for informational purposes only. You should not construe this content as legal, tax, investment, financial, or other advice, nor as a solicitation, recommendation, endorsement, or offer by Blockstation or any associated third party to buy or sell any securities or other financial instruments in any jurisdiction in which such solicitation or offer would be unlawful under the applicable securities laws. All Content is information of a general nature and does not address the circumstances of any particular individual or entity, nor does it constitute professional and/or financial advice, nor does it constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. Blockstation is not a fiduciary by virtue of any person’s use of or access to content. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of the content before making any decisions based on such content.