The digital revolution has changed business, communication, shopping, news, and self-expression. But there are few things more intriguing than the effect technology is having on money, commerce, and finance.
With paper money becoming less popular and most people relying on cards or mobile devices for the digital transfer of their funds during transactions, the notion of ‘fully digital money’ is not necessarily out of the realm of possibility for seeing mainstream attention.
But cryptocurrency offers things that national currencies don’t. The decentralized nature and encryption provide a hedge against inflation, though even the concept of ‘private money’ is still baffling to some. This has been shown in the wild fluctuations in the crypto market, which have slowed but not stopped the buzz around crypto.
But at its core, digital money is still a unit that takes up space on a drive – meaning it could be accessed by anyone who can access that drive. Bigger bounties to be had make for more ambitious cyber-thieves, and one of the top crypto organizations in Japan recently opened up about how their business had been affected by the loss of $400 million in NEM coins.
The company, known as Coincheck Inc., noted that the coins were sent outside the venue illicitly. Even company co-founder Yusuke Otsuka said he wasn’t sure about exactly how the massive amount of coins were swiped from the system.
While the method is still a mystery, Otsuka said the company knew where the funds were sent. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment.”
Japan’s Financial Services Agency is said to be investigating the situation, which marks the biggest loss of digital assets since they caught on with the launch of Bitcoin in 2009.
NEM is the tenth-largest cryptocurrency in terms of its market value. But its high ranking couldn’t stop it from taking a tumble once the news broke. It fell 11 percent in just 24-hours, bottoming out at 87 cents. This could cause investors in Japan to think twice about going all in with crypto. Despite the protection it offers against long-term inflation, its clear that some security vulnerabilities still exist.
The incident may bring back memories of the massive Mt. Gox collapse of four years ago. Licensing and oversight have been used to try and prevent a similar occurrence from happening again, but this could also have the opposite effect of what crypto enthusiasts hope for with this technology.
A regulatory clampdown would be a bit hit to the market, especially in a place like Japan where there is a prevalent pro-crypto sentiment. The strength of NEM when compared to Bitcoin is that, while both use the blockchain, NEM says their currency doesn’t require energy-heavy mining operations.
Coincheck has been around since 2012, has dozens of employees, and even runs commercials on Japanese national television about their service.