Bitcoin prices have fell from the high $658 that Bitcoin reached on Saturday to it's current price of $552. The price had started falling gradually over the last few days. It was at $605 yesterday when I last checked. I wondered why it was falling but I figured that it was just people dumping and nothing more. Flash forward to today, Bitcoin price is $552. Seriously. Turns out that the Hong-Kong-based Bitcoin exchange Bitfinex was hacked.

The Hack

The Bitcoin exchange Bitfinex had stopped trading and paused all of the on-going withdrawals and deposits. On social media, the bitcoin exchange reported that it had lost 120,000 BTC. Which is roughly equivalent to $60 million.

As a response to this hack, the Bitcoin prices fell down 20%. From the high they reached on Saturday of $658 to the current price of $552.

The Bitstamp chart of bitcoin prices shows that it reached an high today of $570 and even dropped to the low of $521.

Analysis

This hack generates uncertainty all over the Bitcoin community because not only it makes us question the security of recent online crypto exchanges. You'd have thought that the crypto-currency exchanges might have learned a lesson from the horrible nightmare which is engraved into our memories by the name of Mt. Gox.

Whenever a customer decides to entrust his hard earned dollars/bitcoins to a particular exchange, he does so by trusting the exchange. He looks at it's security, history and even talks to other Bitcoin enthusiasts who had completed transactions from that exchange. Is it fast enough? Is it secure enough? How are Bitcoins stored? Physically? How is the customer support?

I think that the most important question here is the one that concerns the security of the website. There are a ton of exchanges online that claim to be the most secure exchanges. You obviously cannot take their word for it. Instinctively, you look for testimonials and even reviews of the said exchange. You observe and analyze those reviews and then make your choice, whether you want to entrust your bitcoins to that exchange or not. Even then, you cannot be a 100% sure. I mean, any exchange can get hacked the next second. So, what can you do about it?

Well, there is very little that you can do. In fact, all you can do is ensure that you are using the right, most trusted, reliable, and secure exchange. The security is the job of the exchange. They should do everything in their power to secure the wallets, their servers and the transactions of the users.

This hack caused the Bitcoin prices to take a dive but this is not the only effect this hack has had. The major effect of this hack is that it has created uncertainty among the Bitcoiners.

Everytime a hack occurs, it sparks a natural feeling of vulnerability in the userbase, which is what is happening now. I think that it was time something like this occured; I'm not saying it's good. Although it's extremely sad, but people needed a wake-up call.

When it comes to crypto-currency, the most important thing is a safe and secure account. If you choose your weak Facebook password as your crypto wallet password, then you're just baiting the piranhas with your blood.

The Bitcoin prices are not the result of only this hack, they had been steadily declining over the past few days. Experts say that it is the fault of halving of the rewards in the Bitcoin Network. This hack surely highlights the weak spots of digital currency and shows how it can potentially decline, but the bitcoin price-dive is only a temporary ailment. I can say that the Bitcoin prices would soar in the next twelve months.

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