WalletPort — New Year, Same Problems
Not even one week into the new year, the contentious debate around self-custody is still hot on everyone’s lips. This time, the catalyst came in the form of a New Year’s Day hack involving Luke Dashjr, one of the longest-contributing Bitcoin core developers. Whilst the total sum of Bitcoin stolen is unknown, it appears as though around 216 BTC, over £3.5 million was lost. From his official account, @LukeDashjr, he announced “My PGP key is compromised, and at least many of my Bitcoins stolen. I have no idea how. Help please.” PGP (Pretty Good Privacy) is an encryption program that provides cryptographic privacy and authentication for data communication. He went on to claim that he believes everything is compromised, even including his Twitter account and has strongly cautioned others against using Bitcoin Knots, a Bitcoin Wallet signed by his now compromised PGP key.
This news will no doubt send a shiver down even the most battle-hardened crypto veterans. The full details behind how the hack was carried out remain unknown. It has however sparked plenty of debate, yet again, around the issue of self-custody. Following a recent tsunami-sized wave of FUD, Binance CEO, Changpeng Zhao has taken his chance at shining some spotlight on the issue at hand. CZ announced that he had informed the Binance security team of the theft and that any crypto linked to the hack would be frozen if sent to Binance.
Whilst this might seem a noble gesture from CZ, one must ask questions of his motives given the fact the recent wave of FUD against Binance has seen some of the largest withdrawals ever seen. “Self-custody have a different set of risks” he included in a tweet relating to the hack. It’s worth keeping in mind that in a recent Twitter space, he warned that “99% of people will lose crypto” if they are holding in self-custody. It’s hard to know whether he has his own interests at the fore rather than us as customers. It’s up for debate.
This whole episode has sparked some vociferous discourse. Popular Crypto Twitter personality @udiWertheimer was quick to echo the concerns shared by CZ. In his thread, he claimed, “if this can happen to the world’s leading experts, it can happen you too.” He goes on to argue,
“The first thing to understand about crypto custody is that no single solution is ‘the best’. People have different needs, different skills, and different risk appetites. There’s no one way to cater to everyone”.
This notion is hard to disagree with. There is no one size fits all approach to anything in this space. But perhaps that’s part of the problem. When you have an industry leader in the form of CZ scaring retail investors out of self-custody and a swarm of ‘influencers’ simultaneously scaring everyone about the dangers of storing on an exchange, what does one do? How does one protect themselves and have complete peace of mind amongst a seemingly endless back-and-forth dialogue with no conclusive answer?
Udi went on to outline his rather extreme opinions on seed phrases, labelling them an ‘abomination’ and something that should have never gotten this popular as they give you too many ways to shoot yourself in the foot. He might be right with the latter part of his opinion but to outright slam, the concept as an abomination might be a step too far. He believes that people shouldn’t handle seed phrases themselves owing to the fact there are many ways to make a mistake even when you are an expert.
Ethereum founder, Vitalik Buterin, also recently chipped in with some commentary on the issue. In a recent tweet, he claimed,
“The ‘centralised anything is evil by default, use defi and self-custody’ ethos did very well this week, but remember that it too has risks: bugs in smart contract code. Important to guard against it, keep code simple, audits, formal verification and defence in depth”
Adding that ‘defence in depth’ that he references is exactly what we’re aiming to do here. Around 91,363 Bitcoin were pulled from exchanges in November, worth a total of close to US$1.5 billion based on the November average price of around US$16,400. If the concern around self-custody is primarily fixated on the mishandling of seed phrases, WalletPort will be perfectly placed to fix this longstanding issue once and for all.
Another answer to this problem is concise education on the topic of self-custody. No more mixed messaging from prominent figures within the space. But aside from what can be done on the education front for newer market participants, the motivation behind what we are building with WalletPort is to provide much-needed safety, security and overall clarity around an area that is desperately in need of all 3.
