Cryptocurrency Exchange Failures Point to Need for Better Industry Standards

Cryptocurrency Exchange Failures Point to Need for Better Industry Standards
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The rate of failure for cryptocurrency exchanges is something of an urban legend. The industry has seen massive numbers of exchange hacks, thefts, and just general mismanagement. In fact, 2018 set records for all these categories and more.

The problems aren’t just with hacks and theft either. A whole array of issues has surfaced, and the root cause is traceable. At the core, exchanges are notoriously cheap, and this has created a host of problems. However, companies like CPI Tech and others are providing the necessary solutions.

On the cheap

The root cause of the issues is the overall nascence of the companies. While seeking to create an online image, many cryptocurrency exchanges are run with poor development, at best.

Weak developer skills have created holes throughout the exchange community. And of course, at the core is an unwillingness to pay for the highest value developers in the industry. The existence of hackers that are able to break through shoddy security should indicate that the industry has white hat developers who can protect exchanges.

The problem is that such high-quality development costs a substantial sum of money. When exchanges are in a rush to increase volume, paying high fees for development is simply non-sustainable.

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This leaves consumers in a wicked catch 22. If they want security, they have to go to larger exchanges with higher prices. But if they want low prices, they have to risk losing the funds that are available to them. The core issue can be found in an industry without standards.

Perpetuate the demons

And the problems don’t seem to stop there, either. More than just with the cryptocurrencies themselves, many such portals have brought security issues into other decentralized assets as well.

Take, for example, the DX Exchange. Creatively designed as a site where stocks could be tokenized, the site was understaffed and lacked the technological know-how to keep its customers safe. In spite of the substantial hype that surrounded the release, the company faced a host of technical issues. Weak internal then led to an overall distrust in the market for the company.

While the model of tokenization was good, the execution was not. Because of the technical failures, many abandoned the company, seeking increased security and greener pastures. The problems could have been handled easily had the company begun the process with a more streamlined solution.

Toward a viable option

While the problem is clearly wide-spread and difficult, a host of solutions have been offered. However, perhaps most attractive is the concept of third party technical assistance.

Because exchanges are limited in the number of funds they can afford to throw at development, the market has created a number of third party solutions who specialize in development assistance.

The purpose, of course, is for technology to be centralized, while exchanges do not have to be. These companies have strong development teams working in house in order to build far more efficient and secure platform cores.

They then offer these platform cores to new exchanges. The result is a strong and secure technology base, with a low-fee structure on top – a match made in heaven. 

One such example is CPI Tech. The company has amassed a strong team of blockchain and legacy developers and has been able to produce solutions for a host of blockchain specific needs.

For example, the company offers a pre-built cryptocurrency exchange platform with a remarkably high-frequency trading experience for cryptocurrencies. But this solution also offers plugins for FIAT and other tokenized assets like companies, real estate, or even stocks. The resulting solution produces a helpful and protective platform that manages the risks facing exchanges and comes at a price that new exchanges can afford.

Platforms of this ilk are helpful for the market as a whole. They are able to help companies build robust blockchain software solutions for their current platforms, as well as a user-friendly payment platform for cryptocurrency payment solutions, and even provide marketing solutions for teams that take advantage of their solutions.

While the apparent problems facing cryptocurrency exchanges may seem insurmountable, technological firms are providing solutions that the market can truly use. By removing the cost-prohibitive demands of the backend technology, these companies provide a way for the cryptocurrency industry to continue moving forward.

While exchanges and the cryptocurrency market continue to mature, solutions that offer white-label export options will need to provide the necessary technology for growth. New platforms will continue to be needed in order to fill the gaps between development costs and needed security. 

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