About a month before the “Proof-of-Keys” day, news.Bitcoin.com reported on the vast number of coins centralized exchanges held in reserve. The list was provided by Bituniverse using the firm’s Exchange Transparent Balance Rank (ETBR).
The ETBR list had shown that Coinbase held roughly 966,000 BTC during the first week of December 2019. The ETBR report from Bituniverse shows the San Francisco-based exchange now has 1.03 million BTC ($8.5 billion) held in reserves. The data from Bituniverse stems from on-chain exchange balances recorded by Etherscan and Peckshield.
We can also take a look at Chain.info‘s exchange data. Below we can see similar data to that of Bituniverse. Chain.info shows Coinbase holding roughly 980,000 BTC at the time of writing. In second we have Huobi with 359,000 BTC, followed by Binance with 240,000 BTC.
As a broker and an exchange, and one that can claim it has never been hacked in addition to being perhaps the oldest one in the above list with a focus on the US market, that Coinbase is the biggest custodian of bitcoin is perhaps not surprising.
One of the more shocking details about this data is the amount Coinbase holds in comparison to the others. Huobi, who comes in at #2, holds only 1/3rd of the amount of Coinbase.
The amounts held by these exchanges is staggering. The top 7 exchanges hold the equivalent of over $25 billion USD. Though most of the top exchanges hold a large amount of these assets in cold storage, it is still highly irresponsible of the users to leave their assets stored on these exchanges.
Your odds of losing your funds to hack are much higher if they are sitting in an exchange wallet vs. a personal wallet. Only keep what you need on there and put it in your wallet as soon as it’s no longer needed.
In combination the top five exchanges have about 10% of the total supply at about 2 million Bitcoin, and the top 10 have 2.5m BTC in their possession.
That aligns with other stats that suggest just 10% of the supply sets the price, but as this is only a limited number of exchanges that does not include things like Bithumb, we’d estimate probably around 30% of the total supply is on exchanges, and maybe circa 50% is under third party custodians.
Exchange hacks in 2019 are a record high.
Despite not having a hack on the magnitude of 2018’s Coincheck hack ($534 million), hacks of exchanges have increased according to a Chainalysis report.
The Chainalysis report also highlighted that malicious hackers are becoming smarter.
2019 saw more cryptocurrency hacks than any other year. But of the 11 attacks that occurred this year, none of them came close to matching the scale of major heists such as 2018’s $534 million Coincheck hack.Chainalysis – https://blog.chainalysis.com/reports/cryptocurrency-exchange-hacks-2019
Last year digital currency exchanges lost approximately “$283 million worth of cryptocurrency” due to breaches and malicious hackers.
The fact that less money has been stolen overall is a good sign. It indicates that exchanges may be becoming more sophisticated in how they store their assets. However, I ALWAYS recommend that you never leave your assets on an exchange. Only keep what you need on there and put it in your wallet as soon as it’s no longer needed.