Early reports indicate that Yahoo! Japan is looking to move into the crypto space and launch their exchange as soon as April 2019. However, given the company’s track record with personal data, it is worth considering whether Yahoo! is best placed to run an exchange.
Yahoo! suffered the largest data breach in history
The 2013 hack has been widely reported and marked the worst data breach ever sustained by a company. Every Yahoo! account that existed at the time was compromised by a breach that resulted in the loss of valuable personal information (addresses, social security numbers, credit card information) belonging to hundreds of thousands of users.
Three-billion user accounts were affected by the breach, securing Yahoo!’s place at the top of a leaderboard that no company would want to feature on.
Do we really want an exchange run by Yahoo!?
Their history with personal data doesn’t inspire much confidence in their ability to safeguard their users’ assets, so it’s worth treating any news of a Yahoo! crypto exchange with a critical mind.
Early reports suggest the company is looking to strike a deal with BitARG (who already have a license to operate a crypto exchange in Japan) and build an all-new exchange based on BitARG’s system. If a deal is made, Yahoo! Japan’s new exchange should be able to navigate the legal and technical obstacles of starting an exchange much faster than it would alone — this may not be a positive for the crypto world.
Yahoo! isn’t the sort of company you want to put on the fast-track to operating its own crypto-exchange, especially when hacks have dominated so much of the recent news. Every hack causes unrest in the community, and exchanges/investors are calling for regulation so that the industry can address the problem.
Letting a company like Yahoo! in through the back door invites disaster. It makes more sense (for all parties) to have the company fight for the privilege of running an exchange. Yahoo! should first adhere to FSA regulations and be granted a license only when they can prove that investors are sufficiently protected.
Others will be better suited to running exchanges
The exchanges we use today are far from faultless, but they represent the first wave of platforms interacting with brand new technology, and they’re learning all the while. In the near future, and certainly over the next decade, we’re going to see the crypto space evolve in the wake of regulation and that should mean safer exchanges too.
Consider GDPR in Europe. This legislation isn’t even directed specifically at the crypto space, but it will force many blockchain-based projects to adapt if they want access to an important market. New and existing projects will be built or adapted with these regulations already in mind, so it’s possible that investors will be spoilt for choice when searching for a trustworthy exchange. In that environment, who would trust the world leaders in data loss with their funds?
The effect of losing personal data, though a perverse invasion of privacy, is not always as easy to measure as the direct loss of our funds — the latter is immediately quantifiable and leaves a long-lasting impression, but the former may slip our minds if we don’t see any other repercussions. For this reason, the community may not immediately think to consider Yahoo!’s past should they open an exchange, and that could be risky indeed.
Michael is an English and Creative writing graduate of Liverpool John Moore’s University, a former editor of several magazines, and a crypto-currency enthusiast. He is mostly interested in crypto-legislation and the potential of decentralized technology to change the world.