Security risk

[KingsDen]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

It's very rare you hear that a bank became insolvent due to robbery attack or hackers.
But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

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[DapanasFruit]

Or it could mean that banks are employing better security measures compared to hacked exchanges. Security is a big concern and should be of wider focus in the cryptocurrency market. After the Binance hack, people realized that all exchanges can be at risk. There are many factors at play on this area. One is that many banks are not yet fully digital so they are still conducting their business offline or over the counter while exchanges is purely digital however it does not mean that banks can never be hacked because they can be and there were successful attempts where banks lost a lot of money.

[milewilda]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

It's very rare you hear that a bank became insolvent due to robbery attack or hackers.
But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

Hackers mind..

Why would they tend to hack a centralized institution if they do know that they can be traced up easily on where those funds go? Fiat do leave out tracks and crypto doesnt.
And this is one of the reasons on why crypto exchangers are really like honeypots for hackers because they can really erase up their trails or tracks which its impossible
for someone to get caught if they had done something anonymously.For security then it would vary and to think that theres no such perfect security in reality.

[Coyster]

Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

That's not exactly what it means, mind you that the Bitcoin network for example was created in such a way that users do not have to trust anybody other than themselves, neither should they trust third party services such as exchanges to hold their funds for them, if you keep your funds on exchanges and they get hacked, the problem is not with the network, but with the user (victim), cause if you properly conceptualize what is expected of you as a user in the network, you'd not leave funds in exchange wallets.

Having said that, another reason why you think fiat banks are safer is cause in dex crypto, you are expected to fulfil the responsibility of "being your own bank" yourself, unfortunately, quite a lot of users fail in this responsibility due to insufficient knowledge, greed and the urge to get rich quick, if a user learns what the security protocols on the network are, and follows them, then their funds will be safe, plus the added advantage of control and freedom, which fiat does not and will never offer.

[DooMAD]

Nothing in the design ethos of cryptocurrency says you should hand your money over to strangers on the internet so they can lose it.  It's far more secure if people don't do that.  But it seems like people prefer to take risks in order to try and make a profit.  So they pile all their combined wealth into one, big easy-to-steal pile.

It's not an inherent weakness with security.  It's a weakness with people forsaking their security in exchange for convenience and greed.

[ranochigo]

Exchanges are a service, they are not representative of the security of Bitcoin unless everyone only uses them when they're using Bitcoin. The security comes from whoever is holding the keys for their funds, which is ideally themselves.

Banks are more like your wallet, where you can park your coins while those exchanges are solely meant for users who wants to exchange their coins for another currency. The security of their platform is this largely dependent on their competency. It's not like banks hasn't been hacked before, see Bangladesh SWIFT hack. You don't see banks getting bankrupt because their activities are often fairly low risks and if something goes wrong, the government would probably bail them out anyways.

[blockman]

Both things are happening with the banks, frauds, hacks and with cryptocurrency exchanges too. We cannot say that the banks aren't investing in their security but they're also aware of such frauds that can bypass their system and that's why they're also investing in their security by taking the most comprehensive security that they can. In my country, there has been a lot of bank attacks yet the banks won't stop improving their security because it's taking a lot of losses on their end. But just like the crypto exchanges, they also got bigger cold storage in fiat, and that is what makes them prepare if some huge attacks happen but hopefully, it won't happen to any of them.

[GreatArkansas]

I don't think so we can compare bank to an exchange? They are kinda far from comparison for each other.
But the risk about security is good for comparisons like exchange hacks and bank robbery attacks or hackers too.

But I am sure that there are also a lot of possibilities that banks can go bankrupt even there is no roberry/hacks involved.
Same with exchange too. One of the example is cost of their production, especially they are starting to lose users that will use their platform and pay some fees to sustain their production.

[Little Mouse]

But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

Partially true. Crypto exchanges have their wallet online for the purpose of sending payment which is risky and very likely to get hacked while cold storage don't.
But a bank is also subjected to be hacked and most of the cold storage too  Have you ever heard of the 81 million USD stolen of Bangladesh Bank from Federal Reserve Bank of New York. That was kind of cold storage of course but was stolen.
The crypto world is still so small that you get news on all the updates but you don't get update from the whole world which is the reason you don't know the banking hacks.

[TravelMug]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

It's very rare you hear that a bank became insolvent due to robbery attack or hackers.
But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

I think this comparison is flawed in the beginning.

Banks has been with us for centuries, do we have a record of banks going insolvent early? Or least in their first 10 years of existence? Maybe that's where the comparison should be, or at least close to.

Majority of crypto exchanges are less than 10 years, If I'm not mistaken, Binance for example one of the biggest and top tier exchange was just established in 2017. And then we have mid to small tier exchanges who have been hack or exit scams. So comparison is moot at this point, crypto is still fairly young and the data might not yield anything or remotely close to fiat banks.

[Darker45]

Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

Since you are talking of cryptocurrency exchangers, I would say yes.

If I were to paraphrase your question, supposing you save money in a bank and cryptocurrency in an exchange, which among the two has a higher risk? It's the latter. Which among the two savings is more likely to be robbed or stolen? It is still the latter. If in case both savings are stolen from you, which between the two would you more likely recover? It's the fiat in the bank.

So what could we deduce from this? It is that saving cryptocurrencies in exchanges is risky. So avoid it!

But you have to take note, first and foremost, that cryptocurrencies are not exchanges.

[pooya87]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

Why are you even comparing banks with exchanges? They have nothing in common. If anything exchanges are more like stock market.

Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

Again comparing apples and oranges. If you hand over your money to someone you don't know and they lose it, that doesn't mean "money" was unsafe, it just means you threw your money away.

[cabron]

Banks have the higher rate of course since this banking industry had been around for decades. Banks are bailed by the government for them to operate. But I don't think the statistics will help to counter fud against centralized crypto exchanges. The stats are outside the technological advantages of Bitcoin, you could just consider both centralized exchanges and banks are in the same boat.

[clint25n]

every comparison must be in accordance with this because it involves security which may be something that cannot be separated from a security system, for example, a bank that has a fairly high level of security because it is related to banking. in it, this must be very private and should not be known by others regarding their respective privacy

[rhomelmabini]

Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

I guess that's how the way you should put it. Most traditional banks spend millions if dollars just to make sure they are well-protected against this kind of attack. I don't mean crypto exchanges doesn't spend for this but history tells that they do. Most traditional banks that gets bankrupt wasn't from hacks but mostly they haven't meet their obligations.

[anu1908]

assuming your comparison hold trues, then the conclusion would be "exchanges have lower security standard compared to bank". i don't see why you drag it out into crypto vs fiat thing. what does fiat security mean anyway? if a robber point a gun at you and grab your cash, does that mean cash has lower security? compared to when a robber grab a hardware wallet from your home but they still can't access it because you put a password or something, does that mean crypto has a higher security? the comparison is really hard to make without any standard.

[hatshepsut93]

Banks fail more often in poor countries due to weaker economy and higher chances of committing fraud by their owners, as corruption is more common in such countries. The difference between banks and exchanges is that with crypto there's no chance to revert transactions, so if they get hacked, there's nothing they can do, while banks could freeze and revert transactions, and most large transactions won't even pass advanced security checks, while with crypto you can withdraw billions in one click. Similarly, it's easier to make an exit scam with crypto, while it's a bit harder to cash out and hide billions in fiat, though it is possible and it does happen in real life - banks commit exit scams very similar to exchanges.

[davis196]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

It's very rare you hear that a bank became insolvent due to robbery attack or hackers.
But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

How do you imagine a bank being hacked by a bunch of hackers and they move the money from one bank account into another bank account? Bank transfers are transparent and reversible.
Fiat banks don't go bankrupt,because the central banks can provide them with financial support.
The security risk of crypto exchange platforms(NOT cryptocurrencies) is bigger,because:
1.The level of online security isn't top notch,unless we are talking about the big and reputable crypto exchanges.
2.The crypto funds aren't guaranteed against theft.
3.The risk of an exit scam exists(at least in the smaller crypto exchanges).

[Kong Hey Pakboy]

They have more risk since they operate on a decentralized level and they don't exactly have any government backing them so they have a hard time protecting themselves from attacks so all they can do is just to create a much secure site than ever.

[yazher]

Can we compare the rate at which fiat banks go bankrupt and the rate exchangers do?

It's very rare you hear that a bank became insolvent due to robbery attack or hackers.
But often you will hear that one exchange is hacked or so.
Does is really mean that the security risk of Cryptocurrencies is higher than that of fiat banks?

Obviously, this kind of incident only applies to those exchanges that have no issued license or their government has nothing to do with them. unlike the top exchanges right now which are Binance or Okex, their rarely become victim to this kind of thing due to their solid counter-strategies which will make you give some consideration whenever you want to invest in the cryptocurrency, you will gonna choose these kinds of exchanges. The other exchanges that have been hacked or totally closed are due to their lack of development or they planned those things in the beginning before they disappeared completely just like what happened with the Turkey local exchange.

https://coingeek.com/turkey-arrests-62-over-alleged-2b-thodex-exit-scam-as-leader-flees-country/