Knock on wood: Coinbase is the only exchange yet to suffer a breach.
CEO Brian Armstrong revealed a secret to its success to Wall Street Journal reporter Paul Vigna at Consensus this morning: it hires spies, unbeknownst to most of the staff, who attempt to infiltrate the exchange’s offices and compromise the network.
“We hire third-party firms to try and break into it,” he explained. “They pose as candidates applying to work at Coinbase. Typically, only the head of security and me know that it’s a drill.
But the person will come in, and apply for a job, and try and get into the office, and try to break into our systems.”
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Any luck? “They might breach one or two” layers of security, Armstrong said. But better them than, say, the hacker that stole $40 million from Binance. Or the hacker that stole $450 million from Mt. Gox. Or the hacker that stole $16 million from Cryptopia.
Armstrong said that customers’ funds are stored in a geographically distributed database and that the exchange is building the “generation four” of its cold-storage system—wallets that holds customers keys offline—which is rebooted every 18 months.
That’s a far cry from $190 million in a dead man’s wallet.