Jun 22
·5 min readThe Case for Self-Hosted Wallets
On Dec. 9, 2018, Gerald Cotten, CEO of Canada’s then-largest cryptocurrency exchange QuadrigaCX passed away, taking with him $215 million worth of the exchange’s client assets (primarily in Bitcoin and other cryptocurrencies). After QuadrigaCX’s demise, roughly 17,000 creditors, primarily consisting of everyday Canadians, lost most of the assets provided to QuadrigaCX’s “custodial” or “hosted” cryptocurrency wallet. QuadrigaCX marketed itself as a licensed money services business with FINTRAC, in compliance with anti-money laundering rules.
QuadrigaCX’s demise and the losses experienced by ordinary Canadians provided a clear example of the risks involved with aggregated cryptocurrency holdings by regulated entities. Despite these risks, regulators globally have since started proposing regulations encouraging aggregated cryptocurrency holdings, by targeting and discouraging the use of their alternative, “self-hosted wallets.”
What is a self-hosted wallet?
A self-hosted wallet is an alphanumeric code that provides access to a specific address on a blockchain network.
Keep reading this article on Blockchain-Medium.