It tells us that things are very different than they were just a few short years ago when Mt. Gox was hacked for a similar amount of money!

The last time a major Japanese cryptocurrency exchange was hacked for a record amount of money, it took almost 2 years for prices to fully recover.

Those affected were never paid back and the exchange was made insolvent basically by the next day.

Over the coming months, the price of bitcoin plummeted by around 90% from peak to trough and altcoins were smashed equally as hard.

So, what is so different this time?

Well, for one, the size of the markets relative to what was stolen.

At Coincheck roughly $500 million worth of NEM was stolen, which is over $100 million MORE than what was stolen at Mt. Gox.

The difference is that at the time of Mt. Gox, the entire cryptcurrency market was worth about $10 billion, so the theft was somewhere around 4-5% of the entire market.

Now, the cryptocurrency market is worth around $600 billion, about 60X larger than it was back then.

So the $500 million dollar theft equates to only about .8%.

On top of that, Bitcoin was stolen at Mt. Gox, which represented about 90% of the entire cryptocurreny market, and this time NEM was stolen, which represents a very small portion of the entire cryptocurrency market.

Next, the number of exchanges is significantly different than it was back then.

At that time, there was really only a coupe of exchanges to trade bitcoin and altcoins on, now there are literally dozens, if not hundreds.

Which means one all the sudden becoming insolvent isn't quite as dire as it was back then.

There are many other options out there still.

Which also brings me to another point, this has been seen before.

At the time of Mt. Gox people hadn't seen something like that nearly as often as they do now. People know now that hacking comes with the territory if you are not careful with your cryptocurrency.

(Source: https://coinmarketcap.com/currencies/nem/)

Finally, investors who were affected by the Mt. Gox theft were never paid back.

Coincheck came out and said they will reimburse investors money to the tune of roughly $.81 per NEM coin that was lost.

Roughly 88.5 yen will be paid per NEM coin to the 260,000 customers affected.

This money is said to be coming from the exchange's own capital.

(Source: https://www.bloomberg.com/news/articles/2018-01-27/coincheck-to-repay-customers-who-lost-money-in-400-million-hack)

As you can see this situation is very different from what happened several years ago with Mt. Gox.

For these reasons it is no surprise the cryptocurrency markets have taken this potentially massively negative news in stride.

In fact, as I write this, prices appear to be inching up over the pre-hack levels, almost across the board.

I would not be surprised to see more and more exchanges start ensuring their holdings (if they don't already) and also keeping more and more customer funds in cold storage as opposed to hot wallets.

This is all part of the evolution and growing pains of this blooming asset class.

Stay informed my friends.

Image Source:

https://cryptocurrencynews.com/altcoins/ripple-xrp-nem-xem-largest-crypto-hack-ever/

Follow me: @jrcornel