Nobody knows when they’re going to die. I could die while writing this. Maybe I wi—
Just kidding. But do you know who did die, at the most inopportune moment? Gerald Cotton, the CEO of ill-fated Canadian crypto exchange QuadrigaCX, who happened to also hold $190 million of his customers’ cryptoassets. Since Cotten died of Crohn’s disease in India on December 9, nobody has been able to retrieve the funds—not even a “consultant,” according to Coindesk.
The story of QuadrigaCX was already a complex one. Customers complained for months that they couldn’t withdraw funds. In November, a Canadian court seized a share of the exchange’s assets on behalf of the Canadian Imperial Bank of Commerce. More recently, the exchange’s social media accounts went down abruptly for maintenance—surfacing only to discredit an apparent sockpuppet account of the same name.
Now the founder is dead and the funds are gone forever.
Not your keys, not your bitcoin
Bizarrely enough, the QuadrigaCX fiasco was seen positively by crypto’s more hardcore proponents. Invoking the maxim, “Not your keys, not your Bitcoin,” some pundits have already moved to frame the story as a further indictment on central banking systems that hold all of your cash. Though the particular nuances of this story are unique (rarely is a single person in control of an exchange’s funds) it is a powerful reminder, to the crypto herd, that any system anywhere that hoards wealth is a point of failure. The only viable alternative is total “monetary sovereignty”—that your funds should be yours alone and accessible to nobody else.
Of course, this leaves you as a central point of failure. As such, some advise entrusting algorithms—such as Google’s euphemistically entitled “Google Inactive Account Manager”—that notify heirs of “inactivity” and send detailed messages as to how to recover a decedent’s funds. Others suggest treating crypto assets as one would a hidden safe of jewels: leave instructions bearing the decryption key in a written note.
Bitcoin pundit Anthony Pompliano offered a more extreme take on the QuadrigaCX saga, writing on Twitter that the loss of cryptoassets—particularly bitcoins, which have a 21 million hard cap—is in fact an enforcement of the currency’s “digital scarcity.” Presumably what he means is that the possibility of Bitcoin funds simply vanishing increases their rarity, which in turn increases their value. (Let’s see how he feels when the Bitcoin supply dwindles down to one after another hundred years or so of large-scale hacks.) Addressing the concern from a bitcoin-hater that “serious money cannot rely on private keys that can be lost,” Pompliano doubled down. “You do realize that people lose cash every day, right? Should we stop using cash?!?”
Nominally, this is a stupid argument. Cash is subject to the same inflationary policies that affect all fiat currency, so can be reissued at whim to make up for dwindling supply. Cash can also be found once lost, without the need for a quantum supercomputer to crack an encryption. But mostly it’s a stupid argument because cash is precisely what Bitcoiners like Pompliano—who often waxes lyrical about a “cashless society”—are gunning so hard to replace.
Yet at the same time, Pompliano’s comparison paints a fascinatingly bizarre picture of crypto’s future, a future of anti-adoption, a future in which Bitcoin’s investors all die off, leaving the planet pockmarked with encrypted hardware devices, buried like Blackbeard’s lost hoards of silver and gold, their codes unknown, but the value of their contents sky high because of “digital scarcity,” showing us that perhaps cryptocurrency was never destined to be money at all—instead, it’s treasure.