Digital currencies between piracy outbreaks and security precautions

Analysts say that the phenomenon of digital currencies will not go away quickly despite a week full of incidents involving piracy that led to the theft of 530 million dollars and the ban on Facebook, and the imposition of controls even in Russia, in addition to large fluctuations in exchange rates.

"The currency has collapsed several times, but it has always rebounded, even if it has been hit hard in recent times," said Steven Inies, Asia Pacific's chief negotiator at the OANDA Exchange, in a statement to Agence France-Presse.

Pirates have stolen $ 530 million of virtual currency from the Coincheck branch of the banking system, leading to price collapses and showing how fragile and volatile these currencies are.

The January 26 hacking operation seems to be the biggest digital currency theft to date, surpassing the $ 480 million stolen in 2014 from another Japanese default bank, MTGOX, Banking offices must obtain a formal license. Finance Minister Tarō Asō, after the Coincheck piracy, confess this week that the government should tighten its control. Coincheck did not "store important things apart," he said. "I think they lack the slightest sense of knowledge or logic."

The authorities imposed censorship in South Korea, China and even Russia, where a bill was prepared last week to control the production of digital currency. Ennis says such supervision has long been necessary. The current framework is "very lenient given the fragility of investors as a result of market volatility and cybercrime ... In general, the control framework in Asia was very poor and set attractive targets for criminals."

The imposition of controls on dealing in digital currencies among the topics raised among the elites participating in the World Economic Forum in Davos, where British Finance Minister Philip Hammond urged governments to exercise "caution." "We have to look at how we organize this environment before the number of entitlements becomes so large that it is fundamentally important in terms of the global economy," he said in an interview with Bloomberg Television.

Then the Internet giant Facebook intervened and banned all digital currency advertisements in an attempt to counter fraudulent attempts.

All these factors have affected the price of Bitcoin, the most popular default currency, which finally rose to about $ 20,000 before falling back to less than half that value with large daily fluctuations in the exchange rate.

But despite the negative publicity and increased interest from the watchdogs, the enthusiasm for these currencies has not declined. Japan's main digital banking bureau, Beat Flyer, confirms that there is increasing interest after the discovery of the piracy of Coincheck. "Many people have become interested in digital currencies," said financial officer. "Our platform has seen an increase in the number of new applications."

He says digital currencies "have the ability to resist," pointing out that he expects a decline in the price to about 6 thousand dollars «before the return of markets to stability».

Traders say there is no way to intercept technology behind virtual currencies, and even if some of these currencies fail, others will replace them.

"Piracy is taking place and people who choose this technology should be aware of the risks associated with it," says lawyer Ken Kauai, a financial and technology expert. "I expect traders to become more selective for banking firms" . He suggested banks and e-commerce companies could use the most stable digital currency among them, while other currencies would be traded as alternative assets.

In view of the high demand for these currencies, a series of audits is likely to be imposed, including customer verification or an external audit of digital accounts to protect against any security flaws similar to those exploited during the Coincheck piracy.