Seven years on from the great 2011 Bitcoin theft, the world of crypto exchange is undergoing a stunning transformation.

The news that those who had Bitcoin stolen in the notorious Mt Gox theft of 2011 has been welcomed by everyone involved in digital currencies.

Revisiting the story serves to remind all of us of the progress crypto exchanges have made in a relatively short period but also the steps that still need to be taken.

In 2011, Mt Gox was riding high and dominating Bitcoin trading, accounting for roughly 70% transactions. It turned out to be a sitting duck – a poorly protected centralised exchange that was always going to be subject to a well-organised attack.

Thankfully, we now have better protected centralised exchanges. Even more excitingly,  a new breed of decentralised exchange is emerging, offering a whole new level of security and convenience.

From exchange central to de-central

The sheer number of centralised exchanges in existence nowadays means that a cyber attack with such seismic repercussions for the industry isn’t likely. But, unfortunately, attacks are still going to happen because centralised exchanges are inherently vulnerable.

When individuals pass over custody of their funds to a centralised exchange in order to trade, their private keys become vulnerable to hackers. And unlike bank funds – which enjoy protection from governments – centralised exchange won’t always be able to refund attack victims.

Centralised exchanges can also abuse power. They can reduce withdrawal limits without warning, while their unscheduled downtime can prevent users from accessing their funds. The sudden delisting of coins is also a risk, resulting in profit loss in some cases.

Whilst the best centralised exchanges have contributed immensely to the ecosystem from a usability and trust perspective, hacks of any centralised exchange ruin the reputation of the crypto space and the value of cryptocurrencies in general.

De-centralised progress

The good news is de-centralised exchanges are emerging fast. This is hugely important for crypto investors. De-centralised exchanges stay true to the cryptocurrency ideal that parties don’t need to take the chance of trusting organisations anymore – instead blockchain technology can ensure commitments between parties are met. Exchanges can be completed without the involvement of an intermediary.

De-centralised exchanges also offer individuals full control of their assets. They aren’t required to hand over their private keys to a third party at any point instead value can be exchanged peer to peer, without the involvement of an intermediary.

Wider solutions

The progress that’s been made since the days of Mt Gox amount to much more than de-centralisation. The user experience and functionality being offered to crypto investors is now rivalling that of the banking world.

More and more interesting projects are surfacing offering amazing functionalities and beautiful user interfaces that should ease adoption.

New protocols are emerging that will enable inter-chain transactions of virtually every one of the 1,500 digital currencies out there.

Soon, one digital currency user will be able to easily send a payment to someone who only uses another. People will no longer be limited to exchanging big-name coins.

A SWIFT like future

The blockchain has been crying out for a solution akin to SWIFT, which was introduced in 1977 to facilitate cross-border payments. Before that, many of the world’s currencies and banking systems operated in isolation.

The crypto world is about to experience a similar revolution. Solutions are emerging that connect one blockchain to another by enabling them to effectively speak the same language. This type of solution will create a blockchain without borders, helping unlock the potential of every digital coin.

Using an overlay protocol, it’s now possible to complete transactions near-instantly (as opposed to taking several minutes or hours). Anonymity is also made possible by scrambling transactions to prevent ownership of a given coin unit being traced through a public blockchain.

Such a solution can work by operating in parallel to an existing blockchain network (such as Bitcoin’s blockchain). As it runs parallel, the exchange is able to translate unique attributes of clients and nodes on each blockchain (such as the wallet ID number) into a universal code that can be understood by all blockchains.

That universal code is what effectively enables blockchains to speak the same language to each other.

This is huge news for everyone  who believes in decentralised currencies, but particularly important for unbanked or underbanked populations in developing countries who already rely on them for financial transactions.

The Mt Gox era is behind us

The development of crypto exchanges into trusted and reputable institutions was always going to be bumpy. The emergence of de-centralised exchanges takes us a giant step away from the Mt Gox days bringing us alongside the fiat banking world in terms of security and usability.

Secure inter-currency transfers on de-centralised platforms is a big part of this story. SWIFT’s importance to the progress and security of financial messaging and international trade to this day can’t be underestimated. The emergence of a fast, secure, SWIFT-like de-centralised solution for digital currencies is similarly revolutionary.

Previous articleThree Key Personas in Cloud Deployment
Next articleHow AI helps retailers hear their customers’ voice | Compare the Cloud
Shidan Gouran is President and CEO at Global Blockchain, and vision behind the Laser Protocol, Ethereum-based blockchain that will use proof-of-stake to allow all blockchains to work together as one big network. Gouran has been the President of Global Blockchain Technologies Corp. since October 2017 and serves as its Chief Executive Officer. Gouran is a Serial Entrepreneur, who founded Nuovotel, one of the first and largest wholesale VoIP service providers of its time, Jazinga, developers of an award winning unified communications system and Home Jinni, developers of the first Android based Smart TV platform. He is an Investor in and Advisor to a number of financial technology and blockchain startups. He mined his first Bitcoin in early 2010 and has been involved with Cryptocurrencies ever since. Gouran studied Pure Mathematics and Theoretical Physics at the University of Western Ontario