Now a trillion-dollar market, the crypto ecosystem has withered some of the toughest conditions within its period of existence. However, like any other technological innovation, it is not short of native challenges. This ‘lucrative’ market faces a myriad of shortcomings, including criticisms from regulators and long-standing financial institutions. But the most significant hurdles are currently attributed to the underlying infrastructures.
In a recent interview during the Paris Blockchain Week, Binance CEO Changpeng Zhao identified crypto custody as one of the hardest challenges that remains unsolved. According to CZ, the inaccessible and complex nature of crypto wallets is undoubtedly hindering mass adoption in the digital asset space. He was also keen to highlight that this one of problems he would prioritize given an opportunity,
“If I had no financial pressure, I would want to solve the most difficult problem that is blocking adoption. That would be the problem I would try to solve.”
The Loophole in Crypto Custody
Anyone who has interacted with crypto long enough understands there is a thin line when it comes to storing the newly found wealth. Stakeholders have in the past lost huge sums of money as result of wallet breaches or forgetting one’s seed phrase. As it stands, 20% of the BTC in supply cannot be accessed due to lost private keys.
Is this efficient for an ecosystem touted as the future of finance? While Rome wasn’t built in a day, the issue of crypto wallets needs to be addressed sooner than later. Some crypto diehards would argue that non-custodial wallets are a long term solution. However, the complexities involved in securing one’s seed phrase paint a different picture.
“But today, most people cannot store their private keys securely. The wallets require them to be technical. Your computer cannot get a virus. If your computer gets a virus, there’s all kinds of problems that will happen. You will lose your money.” added CZ Binance.
Even worse, the current infrastructure of most non-custodial wallets does not feature a solution for passing heritage to future generations. It is quite unfair to invest in an industry where there is no guarantee that one’s offspring will benefit in the event of their death. After all, this is standard practice in the traditional finance scope.
Unfortunately, custodial wallets offered by crypto exchanges are not any better; while they might feature a heritage…
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