Could Vitalik Buterin End Cryptocurrency Exchange Hacks?
Vitalik Buterin, Ethereum’s co-founder, has presented a Blockchain scaling solution that may help cryptocurrency exchanges become more hack resistant. The scaling solution is called Plasma Cash, and it is an evolved version of Plasma, the existing solution.
Plasma Cash = No More Crypto Exchanges Hacked?
During the last months, several hacks occurred to different cryptocurrency exchanges all over the world. Hackers do not distinguish languages, cryptocurrencies or platforms. Some hacks that have been in the news are Coincheck and BitGrail.
Plasma Cash, was developed by Buterin, Dan Robinson and Karl Floersch. Plasma has been created as a scaling solution introduced in August 2017 It works by optimizing data and reducing transaction fees for smart contracts and decentralized applications (Apps).
Of course, solutions are far from being perfect, but they help the network. The main problem of Plasma is that users need to download and authenticate each Plasma block, something that may complicate scaling in the future.
Buterin explains how Plasma Cash works. A Plasma coin would be created with an equal value of Ether and an ID that cannot be split or changed. That would happen every time a user deposits ether on a cryptocurrency exchange or another third party platform.
“A user actually only needs to verify the availability and correctness of the Plasma chain only […] at the specific index of the coin, of any coins that they own and any coins that they care about. Regardless of what happens in the exchange, users can run their money through the Plasma exit procedure and get their money out.”
With this new development, cryptocurrency exchanges could be secured against possible future hacks. The Plasma coin would be linked to an owner, and these coins would not be fungible or interchangeable. In order for someone to steal a coin, the owner of it would have to know about it.
About that, Buterin explained:
“Whenever the next big multi-billion-dollar cryptocurrency exchange written by a totally incompetent developer gets hacked, no one will lose any money.”
At the same time that Plasma Cash is being developed, the Lightning Network is being tested and Segregated Witness is being implemented in many different cryptocurrency platforms.
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