5/07 ANDY HOFFMAN (CryptoGoldCentral.com): Ramifications of the Binance Hack

In February 2014, the “leading” crypto exchange, Mt Gox, was massively hacked. I remember it well, as I had 1.0 Bitcoin there – going against Mike Krieger’s recommendation of using Coinbase, because Mt Gox was “the best.” Even before the hack, its customer service was laughable – and its security, as we learned, non-existent. Not that Coinbase was much better, until many years later – but given its leadership role, Mt Gox was the industry’s top “honeypot”…which hackers; or perhaps, insiders; exploited.

In the ensuing five years, major exchange security upgrades have been achieved - with numerous other hacks, like Bitfinex, helping developers dramatically improve investor safety. Not to mention, the invention of offline hardware wallets like Trezor – which made it no longer necessary to hold significant balances at exchanges. To that end, Adam Meister himself helped me move my BTC from Coinbase to my first Trezor in early 2016 – and since then, I’ve never held more than a few Satoshis on an exchange.

In my view, exchanges are a dime a dozen. They SHOULD provide good security, customer service, and competitive fees if they want to maintain market share and generate profits. I mean, geez, this is NOT early 2018 – when investors paid premium prices for listing on “leading” exchanges.

To that end, Binance is pulling the biggest scam of all – by NOT charging listing fees. The reason being, that they “choose” their coins – which, like Coinbase before it “surprisingly” listed BCash early, enables principals to massively inside trade beforehand. Hopefully, this will end the deification of @cz_binance; “when Binance?” comments by BRhodium holders; and the fallacy that specific exchanges hold the key to investment success.

As for the hack’s ramifications on the crypto market, my biggest question is whether Bitcoin’s “Hoffman Line” – at $5,670 – will hold. Given that BTC recaptured the Hoffman Line, for the first time since November, AFTER the latest Bitfinex/Tether FUD, should provide a hint of the market’s current, vastly more mature, outlook.

In that case, investors correctly realized that neither Bitfinex nor Tether is critical – or even necessary – to crypto success; and frankly, after all that has occurred, you’d have to be (pardon the language) STUPID to hold significant funds in Tether, or at Bitfinex.

This evening, Bitcoin’s initial reaction was to plunge to a low of $6,007 on Bitfinex – where prices remain elevated (for some reason) due to ongoing Tether FUD; and $5,658 on Bitstamp – a rounding error from the $5,670 level representing a $100 billion market cap. Prices have significantly rebounded already – and heck, even BINANCE COIN, which initially plunged from $21.90 to $19.50, is already back to $21.32.

In my view, THE MOST IMPORTANT FACTOR OF ALL is whether the Hoffman Line holds – which thus far, it has done like a champ. Smart investors know better than to hold significant balances on exchanges, and that no exchange is worth deifying. Moreover, the hack was just 2% of Binance’s reserves, so no investors will lose money – and as a result, the entire industry will learn from, and massively upgrade, its cumulative security.

If the Hoffman Line holds, which my early bet is on (for whatever that’s worth), it will officially indicate, in my view, the commencement of a generational bull market - as unquestionably, it will show that crypto has matured enough, that investors realize this is not a Bitcoin or crypto issue; or even an exchange issue; but, like Bitfinex before it, a BINANCE issue.

If not, we wait a bit longer for the Digital Age to go viral – which I assure you, CANNOT be stopped…certainly, not by shoddy security at a single crypto exchange.