Bitcoin Price Still Rangebound as Markets Digest Implications of Bitfinex Security Breach

The price of bitcoin rose Saturday, but remained well below last month’s levels as investors continued to speculate about the health of the cryptocurrency market following the Bitfinex security breach.

The BTC/USD exchange rate climbed 1.2% to $580.56 on Saturday, according to CoinDesk. Most of bitcoin’s price movement was higher, reflecting a slight uptrend that began on Thursday.

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Bitcoin plunged over 15% at the start of the month after Hong Kong-based exchange Bitfinex reported a high profile security breach that would cost the firm tens of millions of dollars. As of this week, Bitfinex still doesn’t know who was behind the breach, adding that it was “reassessing storage” options following the hack.

The exchange announced earlier this month that the losses would be “socialized” among members. Each trader was docked 36% as a result.  The decision to spread losses around sparked criticism among bitcoin enthusiasts and raised serious implications about the viability of cryptocurrency in the absence of regulatory and insurance structures.

There’s strong reason to believe that ransomware and other malicious cyber activity are surging in the bitcoin era. According to data from Cyence Inc., typical ransomware payments range from $500 to $1,000, but could grow manifold as hackers begin targeting entire networks at large institutions. As a delocalized currency, bitcoin could make it easier for attackers to demand the release of funds in a method that is untraceable to authorities.

According to an August 19 article published in The Wall Street Journal, bitcoin is now the preferred payment method of most ransomware infections.

Prior to the Bitfinex saga, bitcoin was enjoying a period of relative calm, as growing demand from China fed into a market that was already warming to the idea of digital currency. Experts caution that security breaches and the irreversible nature of bitcoin transactions could impact the coin’s appeal among the mainstream. For that reason, developers are proposing a new Bitcoin 2.0 tries to marry mainstream concerns about security with the innovative backbone of the cryptocurrency itself.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.