During the last months, many different major cryptocurrency exchanges from all over the world faced several hacks. Some hacks that were published are Coinbase and BitGrail. And here comes the question. Could Vitalik Buterin’s scaling solution, Plasma Cash, help cryptocurrency exchanges become more hack-resistant? The Plasma Cash is an evolved version of Plasma, the existing solution.
Plasma Cash was developed by Buterin, Dan Robinson, and Karl Floersch. Introduced in August 2017, it works by optimizing data and reducing transaction fees for smart contracts and decentralized applications. The primary problem of Plasma is the necessity of downloading and authenticating each Plasma block, which may complicate scaling in the future.
According to Buterin’s explanation of Plasma Cash working system, a Plasma coin would be created with an equal value of Ether and an ID that cannot be split or changed. That would happen every time a user deposits ether on a cryptocurrency exchange or another third party platform.
“A user actually only needs to verify the availability and correctness of the Plasma chain only […] at the specific index of the coin, of any coins that they own and any coins that they care about. Regardless of what happens in the exchange, users can run their money through the Plasma exit procedure and get their money out.”
This new development could make cryptocurrency exchanges more secured against possible future hacks. The Plasma coin would be bondage to an owner and these coins would not be fungible or interchangeable. As a result, to steal a coin, the owner of it would have to know about it.
About that, Buterin explained:
“Whenever the next big multi-billion-dollar cryptocurrency exchange written by a totally incompetent developer gets hacked, no one will lose any money.”
At the same time that Plasma Cash is being developed, the Lightning Network is being tested and Segregated Witness is being implemented in many different cryptocurrency platforms.