How Bitcoin Exchanges Affected By DAO And Bitfinex Hacks
In this Bitfinex article, we will tell you about the important points about the speech given by the First Global CEO Gavin Smith on Blockchain Capital Markets at the conference held at the BT auditorium on 9 September 2016.
I will not going to talk about the details of the Bitfinex hacks itself and other related attempts as there are many other columns devoted to this topic are available on the internet.
My speech will focus on the instant effects on the newly formed capital market structures and how the market is going and my company will respond to the hacks and how the market changing due to this event.
Impact on market
The decline in the price of the bitcoins is the most obvious and initial impact due to the Bitfinex hack. It is expected to see a bad reaction as the market still remembers the persistent slide in bitcoin. I believed that lots of active participants in the market will follow the course of action that follows by the First Global.
We felt that it is better action first and then look how the situation gets developed as there was no immediate suggestion regarding contagion risk. However, the most interesting thing here is the behavior of the deposit markets. Before the hack of the Bitfinex, there was a possible return of 15-20% of USA rates used to finance the margin positions, but now the deposits of the bitcoin were down to 1.5-2%.
Counterparty risks are recognized by a growing market
After the difficulties of the Bitfinex, the other interesting development thing happens is the acknowledgement of the risks by the market while placing assets on an exchange especially an exchange having a murky ownership structure.
As an organization, we always assess the counterparties because we perform business based on location and transparency. We are now looking for the same level of due diligence from the exchange customers, which is a welcome development.