Bitcoin Fees Soar: Bithumb pays in excess to move funds followed by the hack

Bithumb is all over the news today for a lot of reasons, first, it faced the hack which was an attack on the largest exchange by volume in South-Korea, the losses were confirmed by Bithumb an estimated $31 million, an investigation is carried out for further losses, Bithumb will be compensating for the losses of the investor in platform. Now Bitcoin fees soar up, why?

While Bithumb hack created a lot of buzz in the industry, the implication and the corrective measures taken by the company has affected in a lot of aspects.

How it affected the market?
  • The hack cost Bithumb $31 million in crypto-assets
  • With the news of the hack rolling over, the investors started shorting their funds, signaling the bearish sentiment to the whole market
  • Bithumb has ensured that the losses will be compensated
  • Bithumb is clearing out its hot wallet in an effort to secure users’ funds
  • Clearing out the funds from hot wallet to cold storage at once has increased the transaction cost

These events are very significant to know how the crypto-market especially the South-Korean market would get affected when a chain of events gets created from a single event.

As Bithumb is the largest exchange in the country in terms of volume, the movement of the crypto-assets from hot wallet to cold storage has a significant impact on the transaction prices of the crypto-assets, the Bitcoin network faced an unprecedented hike in the transaction price.

The current block fee on the Bitcoin network  Image Courtesy: bitcoinfees.info

This makes sense in some way, followed by the hack it the most sensible thing to do would be to transfer the funds from hot wallet to cold storage in order to avoid further losses.

Sergej Kotliar confirming the hike in the transaction prices is due to Bithumb transferring their funds from hot wallet to cold storage  Image Source: Twitter

 Sergej Kotliar confirmed that the hike in the transaction price hike was due to the transfer of funds from hot wallet to cold storage in a twitter feed stating that the big backlogs and high fees on the network are followed by Bithumb’s transfer.

This is definitely a temporary event when the backlogs will clear, the network will stabilize and the transaction fees will normalize, however till the moment the backlogs have not cleared the fees would remain high.

This is a very good case in order to analyze how certain events leave a ripple of events that take a lot of time in order to resolve the issues and how they should be tackled, Bithumb might have lost a ton but the lessons learned are invaluable, the corrective measures that the exchange would take will eventually revamp the security of the platform.

Image Source for featured image: gettyimages.com


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