Trying to do without trust is destroying cryptocurrencies

Cryptic characters in neon, a password or curse word Just look at the current debacle around QuadrigaCX, as computer engineer Johnny Bartlett tells it:

In a previous article, I noted that Bitcoin’s security features actually work against the users, rather than for them. The “anonymizing” features don’t actually make you anonymous unless you are already a super-geek. And the fact that transactions can’t be overridden by a third party actually winds up benefitting the criminals more than the users.

This week, it has been reported that there is a Bitcoin exchange with $190 million dollars worth of assets which are no longer accessible by the users. What happened?

Were they misspent? Misinvested? Laundered? Stolen?

Nope. None of the above. In some ways, it’s worse than that:

Gerald Cotton, founder of Canadian cryptocurrency exchange QuadrigaCX, reportedly died of Crohn disease in India December 9, 2018, taking the secret password to a reported $190 million with him to the grave, according to his widow Jennifer Robertson …
In fact, if the reports are true, the $190 million hasn’t moved at all. And it never will. The problem is that they can’t unlock the wallet that contains the assets without the deceased’s password. More.

Some think it’s all an exit scam actually. Anyhow, trust is a human thing. Maybe it can’t be imported into an environment run by machines.

Says Dan Goodin at Ars Technica,

The debacle should be unthinkable for any financial institution, but sadly it’s just one of many similar issues to hit a cryptocurrency exchange in recent years. Attorney, educator, and lawyer Pamela Morgan penned an article in 2015 outlining the disaster preparedness steps cryptocurrency holders should take to ensure they can recover digital tokens when unexpected events strike. Based on Robertson’s sworn testimony, it’s a good bet QuadrigaCX didn’t follow any of these best practices. It’s an equally good bet that most competing exchanges don’t either. And that raises questions about the judgement of people who continue to entrust their funds with these services.

See also: How do bitcoins work anyway?