In a 2014 appearance on the True Bromance Podcast, Gerry Cotten, the late CEO of embattled Canadian cryptocurrency exchange Quadrigacx, made comments indicating that the exchange was storing customer funds using paper wallets. Cotten also compared losing the private keys for a bitcoin wallet to “burning cash.”
Cotten Discusses Cryptocurrency Custody During 2014 Podcast
With Gerry Cotten having supposedly comprised the sole individual tasked with managing Quadrigacx’s keys, the roughly $195 million in funds owed to 115,000 of the exchange’s customers has dominated the cryptocurrency news cycle in recent weeks.
While speaking on a podcast published March 12, 2014, Cotten stated that the exchange held its customers’ funds offline using paper wallets. He said: “At Quadrigacx, we’re obviously holding a bunch of bitcoins that belong to other people who have put them onto our exchange. So what we do is we actually store them offline in paper wallets, in our bank’s vault in a safety deposit box, because that’s the best way to keep the coins secure.”
Quadrigacx Keys Might Be Held in Safety Deposit Box
Citing the benefits of paper wallets, Cotten continued: “Essentially we put a bunch of paper wallets into the safety deposit box, remember the addresses of them. So we just send money to them, we don’t need to go back to the bank every time we want to put money into it. We just send money from our Bitcoin app directly to those paper wallets, and keep it safe that way.”
Cotten asserted that the best way to store one’s private key is to ”print it off, store it offline in your safety deposit box, vault, whatever, and then take the public key, which is your address, and use that to send money to it. So that way you can never have your bitcoin stolen, unless someone, like, breaks into the bank, steals your safety deposit box and gets into your private key and so forth.”
Losing Private Key Akin to ‘Burning Cash’
Quadrigacx’s cofounder compared losing the private key to bitcoin wallet to “burning cash,” adding “Even the U.S. government, with the biggest computers in the world, could not retrieve those coins if you’ve lost the private key. It’s impossible to retrieve those.”
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