A blog dated 28 January, informed about the partnership between Boston blockchain company Arwen and crypto exchange KuCoin. This collaboration works towards a goal to provide traders with even more secure facilities while trading at centralized exchanges.
Arwen’s CEO Sharon Goldberg noted:
“Centralized exchanges are valuable pools of liquidity for traders. The problem is that trading on centralized exchanges without an advanced security system is inherently risky for traders.”
Sharon further emphasized that if the security of exchange is compromised during a trade, it puts the funds at risk. The new offering would be able to keep the funds safe even in case of a hack.
The blog continued that centralized exchanges are often the target of malicious persons looking to make an easy gain. Traders who house their funds at exchanges often face losses due to a poor level of security.
To quote the staggering figures, a Bitcoin security expert said that an estimated 2.5 million U.S. dollars are stolen on an average per day. Another study put the cumulative amount of money stolen so far at 1.5 billion U.S. dollars.
The conventional methods for safekeeping rely on a host of services and products that operate by trusting a third-party to manage users digital coins. Decentralized exchanges are a step ahead to overcome the trust issue but have their own set of problems involving liquidity.
Arwen in a bid to tackle the problem has spent over a year to develop a trustless solution ‘that leverage cross-chain atomic swaps’. By using the blockchain itself as the escrow agent, the need to trust another agent is overcome.
KuCoin President and Co-Founder, Eric Don, added that KuCoin has been striving to provide the best security measures. KuCoin has also received an ‘A’ status for security by ICORating. Eric maintained that this has not made them complacent and they keep working to satisfy extreme security requirements.
The blog concluded that Arwen is in talks with exchanges other than KuCoin which share the notion that security is supreme importance. Sharon explained that if customers do not hold their keys, then they do not own their coins. It was in this interest that the new protocol has been introduced that fosters the exchanges to focus on experience and liquidity.
This development comes as a welcome add-on to centralized exchanges. While decentralization is the way to go, the role of a central mediator cannot be entirely phased out. As cryptocurrencies garner more attention, there will be a large number of takers at centralized exchanges. With great security features, anxieties about funds will be put to rest.