Gold Bug Loses All His Bitcoin and Blames Wallet

A recent tweet from economist and gold bug Peter Schiff has sparked a debate in the cryptocurrency community. On January 19th, he tweeted,

I just lost all the #Bitcoin I have ever owned. My wallet got corrupted somehow and my password is no longer valid. So now not only is my Bitcoin intrinsically worthless; it has no market value either. I knew owning Bitcoin was a bad idea, I just never realized it was this bad!”

Schiff was using Blockchain mobile wallet to store his crypto, but unfortunately was unable to access his funds due to an alleged encryption error. Many, however, believe his inability to access his crypto is the direct result of his technological incompetence. Regardless, Schiff has already used this incident to promote his bearish perspective on Bitcoin. Entrepreneur and investor Anthony Pompliano responded succinctly to Schiff’s criticism of the value of Bitcoin;

Translation: You forgot your password?
Same thing happens to your email if you’re irresponsible and forget your password, Peter.”

It is easy to laugh off Schiff’s tweet as an attempt to discredit the Bitcoin network (and many have), but some major players in the space think this incident is indicative of a much larger problem. The problem can essentially be boiled down to a single question: is wallet security too complicated for the average user?

Security can be Scary

Among certain demographics, there is the lingering perception that Bitcoin ownership is convoluted and not worth the headache that comes with it. The generation of private keys and storage of private seeds is a process that tends to intimate those who do not consider themselves to be technologically savvy. This is a perception that is not acceptable to those who believe crypto can reach mass levels of adoption. Ethereum co-founder Vitalik Buterin took the incident as an opportunity to preach the idea that security should be made simpler:

Disappointed at people replying to this with ‘crypto is what it is, it’s your job to be super-careful and write down backup seeds in three places’. We can and should create better wallet tech to make security easier.”

Vitalik is one of several blockchain developers that firmly believe that simplicity and accessibility will play a large role in aiding levels of adoption. Obviously, developers want as many people using their projects as possible and are therefore incentivized by greater levels of adoption.

Exchanges are Easier, but at What Cost?

Another person who has been vocal regarding the complicated nature of crypto security is the founder and CEO of Binance, Chengpeng Zhao (CZ for short). CZ tweeted that,

Many hardcore crypto advocate storing your own keys. But the truth is, today most people are not able to secure a key even from themselves (losing it). A trusted centralized exchange is safer for most people. The numbers speak for themselves. Need to work on wallets.”

This endorsement for the security of exchanges should be taken with a grain of salt, as CZ is the founder and operator of the largest exchange on earth. Regardless, what he says still has a degree of merit. There is an entire demographic that is currently being isolated by the intimidating nature of crypto security protocol. For this group of people, it is less likely that they will forget their password to access the exchange than it is they will lose their backup seeds. However, it also needs to be taken into consideration that centralized exchanges can, and do, get hacked.

Circumventing Trust

There is an inherent level of trust required when you keep your funds on an exchange, and this trust is somewhat counter-intuitive to the core Bitcoin ideology.  Third-party trust can be mitigated by generating and storing your own private keys, but by taking custody of your own crypto you are essentially placing trust in your own competency. This works out for those who do their due diligence, but unfortunately is where it all went horribly wrong for Peter Schiff. He mistook his inability to responsibly manage his assets as an indication that crypto security protocol is unreliable and harms the market value of Bitcoin. In reality, the only unreliable element of the Bitcoin security protocol involves the user’s ability to be responsible with their data. Whether or not Peter Schiff understands this is ultimately irrelevant, but his sentiment about security gives some insight into the perspective of the less-than-competent crypto owner.

Disclaimer

The information contained in this Article is not intended to be a source of advice or investment analysis with respect to the material presented, and the information contained in this Article does not constitute investment advice. The information is intended to be used and must be used for informational purposes only. The ideas, strategies, reports, Articles and other information expressed in this Article are our opinions and should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Readers should be aware that trading tokens and all other financial instruments involves risk. Past performance is no guarantee of future results, and we make no representation that any reader of this Article or any other person will or is likely to achieve similar results.

Any views or opinions represented in this Article are personal and belong solely to Market Rebellion and do not represent those of people or companies that Market Rebellion and its affiliates may or may not be associated with in a professional or personal capacity, unless explicitly stated. Furthermore, Market Rebellion, and/or its affiliates, including contributors to the ideas, strategies, reports, articles and other information in this Article, may have a financial interest in one or more of the tokens mentioned or the company granting or issuing the token, or otherwise have a business relationship with such company.

While we have made every attempt to ensure that the information contained in this Article is correct, Market Rebellion is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this Article is provided “as is” and without warranty of any kind, express or implied. In no event shall Market Rebellion be liable to you or anyone else for any decision made or action taken in reliance on the information in this Article or for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with this Article or the information contained in this Article. Market Rebellion reserves the right to make additions, deletions, or modifications to the contents on this Article at any time without prior notice.