CAN SELF-CUSTODY WALLETS BE A DEFENSE AGAINST CRYPTO HACKS?

On July 18, what seemed like a mundane Thursday quickly spiralled into a frenzy for the cryptocurrency ecosystem and India when the report of a USD 230 million (INR roughly 1,900 crores) crypto hack came to light. That's seven zeros after 23 and made up approximately 45 per cent of the crypto assets of the affected exchange- WazirX.

- PAROMITA GUPTA

Almost one month later, the assets remain unrecovered with WazirX users demanding their hard-earned money back. The situation worsens with India's stance on keeping cryptocurrency at a one-arm distance, including levying a one per cent Tax Deducted at Source (TDS) on the transfer of Virtual Digital Assets (VDA), alongside a flat 30 per cent tax on income from these transactions.

Gaurav Chaudhary, a WazirX user, claimed to have around INR 79 lakhs invested in the platform and said trusting the Nischal Shetty venture "was the biggest mistake of my life." Recently, Binance notified that it recovered USD 73M in stolen funds as of July 31, surpassing the USD 55 million recovered in 2023.

So, the question arises: Can there be a method that makes crypto investments and management more transparent and safe? Several industry players believe the answer lies in self-custodial (non-custodial) wallets.

A POTENTIAL DEFENSE

For the uninitiated, crypto wallets enable the storage of public and private keys. The public key allows the user to receive money while the private key is for sending. The private key is also the password to one's email. Wallets are either custodial or non-custodial, depending on who controls or has access to private keys.