According to Coincheck, the shortage of engineers in the country is partly to blame for the heist it suffered in January this year.
Just when Japanese traders thought that another incident like the Mt. Gox breach in 2013 wouldn’t happen again, Coincheck lost more than $500 million of NEM in what was once again one of the biggest cryptocurrency heists in history.
While investigating the breach, Coincheck said that the incident reveals the difficulty that companies in Japan have in finding competent software developers.
“We were aware we didn’t have enough people working on internal checks, management, and system risk. We strived to expand using headhunters and agencies, but ended up in this situation,” said CEO Koichiro Wada.
While this may sound like Coincheck is attempting to misdirect the conversation to sweep its own ineptitudes under the rug, the company isn’t the only one complaining about the shortage in skilled labor.
Many companies involved in Japan’s enormous cryptocurrency market are having trouble finding cybersecurity experts and people sufficiently versed in blockchain technology to be useful to their operations.
“It could put the brakes on everything. The sector’s growing so quickly, and the better exchanges are surviving. But many of them will fail,” said Alexander Jenner, one of the many headhunters in Tokyo.
Currently, there are 32 exchanges open in Japan. This simple fact makes competition much more difficult since the unconsolidated market is constantly looking to hire new people.
The shortage of human capital would ultimately lead some of these exchanges to either merge into a larger entity or call it a day and close down entirely.
The hiring frenzy is fueled further by pressure from the Financial Services Agency to increase security after the Coincheck hack.
“The FSA is breathing down our necks on security, compliance and risk. And if you don’t hire, you won’t be able to survive,” said Quoine CEO Mike Kayamori.
The typical hiring incentives such as competitive salaries do not work when a country does not have enough workers to fill in the gaps.
Perhaps the only solution left for these companies is to look out of their own borders and stop looking for potential in-house workers. This presents its own challenges, but it might be the only chance some of these cryptocurrency exchanges have to survive.