Is it possible to create a cryptocurrency exchange that is in no way vulnerable to hackers? According to the creators of Nash, that’s exactly what’s been done.
Nash: A New Kind of Trading Platform?
New technology has emerged that makes bitcoin more programmable. Thus, traders do not need to hand over control of their assets until the final moments of a transaction. Nash, a new cryptocurrency trading platform, is utilizing this technology to ensure all its customers’ financial data and digital assets remain completely safe.
Cryptocurrency exchange hacks have become a serious problem for the industry over the years. Perhaps the two biggest ones that come to mind are Mt. Gox, which occurred in February 2014, and Coincheck, which took place in January of 2018 (four years later). The former saw nearly half-a-billion USD-worth of BTC funds disappear in short of an hour, while Coincheck saw even more money vanish. Overall, it’s estimated that the amount of money lost from these exchanges – when combined – are more than $1 billion USD.
In addition, other hacks have occurred along the lines that have not necessarily been as big, but still make a dent in how the industry is perceived. Binance – the world’s largest and most popular cryptocurrency exchange across the globe – was the victim of a hack that saw more than $40 million USD in BTC disappear earlier in the year. While Binance commented that it had the reserves necessary to account for the losses, the maneuver still “hurt.”
No doubt, every cryptocurrency exchange is hit hard when a cyberattack takes place, no matter the size of the theft. With Nash, however, executives are looking to ensure customers never have to hand their funds over to a third party.
In addition, the company is using what it’s calling a system of “state channel smart contracts” that are utilized across the NEO and ETH blockchains. These ultimately make it so that customers never have to deposit their funds into the exchange itself, which is what makes the money vulnerable to hackers.
These state channel contracts allow specific parties to transact with each other without ever “setting foot” on the blockchain itself. The sender and the receiver place money into a multi-sig address and then verify what funds belong to who.
Security Is Number One
Nash co-founder Fabio Canesin explains:
We initially demonstrated that our proposed architecture could deliver cross-chain markets that compete with the performance of centralized exchanges – an extremely important parameter for liquidity. For this reason, we focused on the NEO-ETH market. Now that this is live and functioning well, we can move onto other networks. Bitcoin is the obvious next candidate owing to its importance in our industry.
Other companies looking to integrate this same technology include Spark Swap, the Lightning Network and Arwen.