Friday, July 10, 2020

Andreas Antonopoulos Advises Investors Not to Trust Third Parties With their Cryptocurrencies

Andreas Antonopoulos, author of Mastering Bitcoin in a recent YouTube session advised cryptocurrency investors against storing their assets on third-party platforms. The Bitcoin proponent also outlined the need for regulations and business continuity in order to advert issues when a CEO dies such as that of QuadrigaCX’s.

Antonopoulos Makes Reference to QuadrigaCX’s Drama

Antonopoulos, famous for his Mastering Bitcoin book recently made reference to the QuadrigaCX series of events. The latter is a Canadian-based cryptocurrency exchange who is unable to refund its customers’ C$190 million worth of cryptocurrencies. It claimed that the death of the CEO had made it lose access to the cold store where the funds are held.

Therefore, the writer has advised people against trusting that their virtual assets are safe on third-party platforms. He added that it is easier for an attacker to steal from these platforms since all the private keys are held in one place. Alternatively, Bitcoin’s aim is to bring about decentralization where there is no central control of how investors store or use their cryptocurrency.

Decentralized Nature of Bitcoin Makes Security Protocol Difficult to Hack

Antonopoulos also pointed out that the decentralized nature of Bitcoin means that its security protocol is harder to hack because an attack has to be targeted on thousands of people on the network. Similarly, private keys are stored on mobile wallets, online wallets, paper wallets, and even hardware wallets which makes it harder to be attacked all at once.

He also said:

And this applies to any domain of money, but it applies especially to cryptocurrencies because it is easier to steal or lose bitcoin and other cryptocurrencies when you put it all in one place, and even more when the control is with just one person.

Instances of Hacks on Cryptocurrency Exchanges

Instances of hack on exchanges which can be pointed out are MT. Gox, one of the oldest crypto exchanges which faced an attack in 2011. Others over the years include Zaif, Coincheck, Bithumb, Coinrail, Coinsecure, Youbit, Bitfinex, Cryptopia, and DragonEX.

One more aspect the Bitcoin proponent focused on, is the need for business continuity, contingency planning, and disaster recovery in order to make amends during events such as QuadrigaCX’s. Likewise, companies in the space need to be audited and regulated like financial institutions. The latter comment goes contrary to his stance in the past that regulations are not necessary when it comes to decentralized assets.

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