Codes Rule Supreme, Who May Protect Your Virtual Assets Then?

“In the past ten years, cryptos bring huge fortunes to the people overnight while making some people penniless. In 2014, Mt. Gox exchange, once all the rage, monopolised 80% of the bitcoins until the day that 650 thousand Bitcoins got stolen.”

On 9 December 2018, Gerald Cotton, the founder of QuadrigaCX that was the largest Bitcoin exchange, died at his thirty of Crohn’s disease and its complications in India.

It also means the eternal demise of 26,500 Bitcoins, 430,000 ETHs, 11,000 BTCs and 200,000 LiteCoins, whose operation was inalienable from his management and administration.

From the perspective of the industry, many crypto exchanges have the private keys of the wallets under their bosses’ private management and administration. Such behaviours directly lead to a substantial volume of debts owed by their companies once the founders accidentally pass away.

These accidents, the private keys’ losses, robberies and storage faults, happen by chance. For example, in 2013, a British guy mislaid a USB storage device with 7,500 BTCs’ private keys.

Coinsuper talk about the Vitual Asset Security

Before traditional asset custody came to arise, people have to keep their assets’ certificate of ownership, serving for extracting their invested assets. This method of ownership tracing is neither convenient nor safe. Since 1929, the collapsing stock exchange crisis, trust companies and financial agencies started to provide custody services. These entities autonomous keep the liabilities of helping investors clear and transfer stock certificates.

A little similar to the previously mentioned asset self-managing, the custody emerged in this period also provided a solution with onerous duties for the clients and turned out to be inefficient. As the securities market expanded, in 1973, the Depository Trust & Clearing Corporation (DTCC) started to run. This agency already becomes a centralised ledger and settlement platform.

Coinsuper talk about the Vitual Asset Security

In China, before the third-party custody came to arise, market makers have frequently abused their power and embezzled clients’ funds for managers’ and operators’ own interests. Some of the embezzlers even absconded with cash!

Typical cases also include P2P finance. As P2P platforms grow in number and size, some trick players, aiming at excess benefit seizing, incessantly provoked troubles. Escapes and debacles unfolded one after another. In December 2015, to regulate P2P industry, the State Council put Interim Measures for the Administration of Business Activities of Peer-to-peer Lending Information Intermediaries into effects. This regulatory document requires all the P2P platforms to select qualified banking agencies as their fund custodial agencies. In other words, banks have the duties as surveillants to monitor how these P2P platforms run their funds while P2P platforms, only as dealers, are barred from touching users’ funds.

These measures would suffocate a series of misconducts, such as fund embezzlement, impropriate capital pooling, running off with users’ money, better users’ asset security conditions and ensure a more transparent and efficient fund operation.

In the arena of blockchain, codes rule supreme.

Losing private keys matters but does not constitute the only risk for crypto holders and investors. The scandal “The DAO” is a typical case that brought trauma to investors.

In June 2016, hackers took advantage of a loophole in DAO smart contract, and theft 3.6 million ETHs. The stolen funds were subject to a 28-day holding period so that hacker couldn’t complete his gateway at once.

To refund the lost money, the Ethereum community decided to hardfork Ethereum in July 2016. Such a move is to eliminate the impairment and ensure the cashback to those who suffered from the loss. During the decision-making process, a majority of community members, including Vitalik Buterin, believed that a massive volume of stolen funds might lead to the demise of Ethereum.

As a result, the hard fork was carried out into effect, and the stolen funds were given back to the previous owners. However, quite a few of people have maintained that Ethereum should not have changed.

Such an incident, therefore, shaped a new branch of Ethereum. The branch unchanged was renamed as Ethereum Classic, contrasting with the changed branch of ETH that we have all known today.

This case evidentially shows that the initiators of the blockchain adoption may still risk themselves in handling with cryptocurrencies and blockchain-based assets even if they may receive their cashback.

Cryptos bring immense fortunes to the people overnight while making some people penniless.

From now on, we have already come into such a stage. Cryptos are not exclusively shared and used by tech experts, with the tendency of such new creations’ diffusing in range and growth in volume, they are increasingly used by non-technological personnel.

As some of them have completed their virtual-asset accumulation in the primitive stage, guarding their treasures come out to be their first pursuit.

To the pith of treasure guarding, those who have a high net value of virtual assets mind more about the measures of risk transfer. Such a preference or inclination triggers insurance companies seek to explore the field of the virtual asset.

Coinsuper talk about the Vitual Asset Security

HKSFC also announced its attitude on the virtual-asset platform regulation, saying that a virtual-asset company should have a wholly-owned affiliate licensed with TCSP and purchase insurances for investors’ virtual assets. The insurance system supports the majority of virtual assets.

Although cryptography enables us to manage and deposit our funds without an intermediate or bank, not everyone may control his or her cold wallet. Eventually, people would find that self-management can be more complicated than they imaged. (When you hold a cluster of virtual assets, several hardware wallets and safes do not guarantee your asset safety to the best)

In this year, nearly 500 crypto hedge funds and ventures come out in operation. Insofar, there are also over 500 ICO projects that finish their crypto sales. Both parties are liable and obligated to find and select a safe place and store their funds.

Ventures and hedge funds should avoid focusing on their strategies on asset security and conformity. Instead, in the condition that a reliable custodian is already able to safeguard their funds, they shall focus on opportunity seeking and portfolio building.

Coinsuper talk about the Vitual Asset Security

A precise and straightforward interface suggests our responsible attitude on bank-level custody service.

A licensed and trusted third party may provide its custody service for your lowest risks. Coinsuper Trust is a recommended choice. Not only a licensee of TCSP in Hong Kong, but also one of the several reputable custody institutions in the industry that firmly support fiat cash deposit and withdrawal.

In the future, a new global economy featured as “trustless” may ground on the blockchain and virtual-asset wallets. Third-party custody also involves its capacity in a board field, including personal finance, professional records, tax services, healthcare service, consumer preference, staff cooperation, and digital identity verification.

Third-party custody is casting virtual assets’ glamour over more people and in depth. The virtual assets, by such means, is shining with higher importance.

Coinsuper is a cryptocurrency trading platform, support USD/Cryptocurrency trading pairs,help you to buy or sell cryptocurrency quickly and briefly.