Too many people—HODLR’s and fast-buck speculators alike—are jumping into the cryptomarkets without having attained an adequate, or even semi-adequate, grasp of the most basic principles.

It’s obvious to most that the act of speculation entails a form of “trust” in a given prospect; in the possibility of an outcome.

But it goes beyond that: speculation also entails trust in the mechanism facilitating speculation; and trust that you—as speculator—understand how that mechanism works and your role within that mechanism.

Should we be surprised that $543 Million worth of NEM cryptos were stolen from Coincheck?

As reported by Business Insider’s Maria Terekhova, Coincheck “was criticized by the public and Japanese regulators for poor governance and security standards, which supposedly facilitated the hack.”

Japan’s response is understandable considering their rapid increase of cryptocurrency volume and the fact that Japan is home to the two largest crypto-heists in history—Mt Gox ($400 million loss four years prior) and now Coincheck.

But we also know that every new technology brings its own unique form of negativity (to quote Paul Virilio who once wrote that “the invention of the ship was also the invention of the shipwreck”). Likewise, the invention of the bank is also the invention of the bank heist. And although crypto exchanges are not officially banks, many crypto investors treat them as banks despite the fact that alternative means of storage have been developed to counter such heists.

Perhaps we can assume that many crypto investors don’t even know the difference between a “hot wallet” and a “cold wallet.” This knowledge is critical since most crypto heists have been aimed at “hot wallets.” If you don’t know the difference between hot and cold wallets—also called hard, soft, and paper wallets—check out our primer What is a Cryptocurrency Wallet?.

Consequently, Japan’s regulatory arm, the FSA, is considering the possibility of mandating Japan’s exchange to use cold storage methods, rendering crypto storage relatively “un-hackable.” This is ironic, as cryptocurrencies were developed as a direct response to the regulatory over-reach of government. But independence from regulatory control, in other words, self-regulation, comes with self-responsibility.

Can we say that such disasters resulting from a weakness in self-responsibility—the self-obligation to know what you are doing, to know the risks, and to act conscientiously in light of what you know and don’t know—is just one manner in which a market, in its nascent stages, “takes care of itself”?


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