Select An Exchange

Finding the right exchange is a crucial step for a new bitcoin trader. Many digital currency exchanges have been hacked, including Bitfinex, which has at times been described as the world’s largest bitcoin exchange.[20]

Bitfinex suffered a hack during the summer of 2016, during which it lost roughly US$70 million worth of bitcoin.[21] The exchange survived the experience, spreading the losses it suffered across all accounts and compensating account holders with newly created digital tokens, which it in turn bought back.[22]

While Bitfinex managed to pull through a hack unscathed, Tokyo-based exchange Mt. Gox was also compromised by nefarious parties, which resulted in the loss of US$460 million.[23] Mt. Gox went into bankruptcy, and a trustee named Nobuaki Kobayashi started selling digital currencies on behalf of creditors in March 2018.[24]

Investors can benefit substantially from conducting their due diligence on any exchanges before using them. There is a short list of digital currency exchanges that have not been hacked at the time of this writing. For instance, Coinbase has never been hacked.[25] However, its customers have been hacked after falling victim to elaborate schemes.

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