As a seasoned researcher with years of experience in the dynamic world of cryptocurrencies and blockchain technology, I find the recent development by Indian crypto exchange CoinDCX to be a commendable step towards enhancing user security. Having witnessed the aftermath of several high-profile hacks in the industry, it is heartening to see exchanges like CoinDCX prioritizing user safety and self-custody options.
The Indian cryptocurrency platform, CoinDCX, has introduced a globally-unique decentralized storage system for digital assets, enabling users to exercise full management authority over their own cryptographic holdings.
As per a statement made on October 30 and reported by crypto.news, it’s been announced that approximately 15 million users of CoinDCX can maintain custody of their cryptocurrencies directly on the platform, eliminating the need for fund transfers.
Generally, user money is kept in both hot and cold wallets managed by cryptocurrency exchanges, making them susceptible to hacking. The latest feature on CoinDCX allows users to have their own blockchain wallet where funds are stored outside of the exchange’s system, thus minimizing potential risks associated with such attacks.
Users also have the option to transfer their assets back to the exchange at any point in time.
Additionally, this innovative feature distinguishes itself from conventional custodial wallets as it does away with the requirement for seed phrases and simplifies the handling of intricate private key management.
Rather than relying on a single method, it utilizes widely accepted security measures such as two-factor authentication and multi-party computation. This is similar to a “dual-key safety deposit box,” where both user and platform authorization are required to gain access to assets, as explained by CoinDCX co-founder Sumit Gupta.
As a researcher, I can affirm that this multi-tiered safety mechanism significantly minimizes the chance of unapproved entry, thereby offering top-notch safeguards for our valued users.
CoinDCX’s push for self-custody comes as the Indian crypto market continues to navigate the aftermath of the $235 million WazirX hack, which left roughly 16 million users without access to their crypto and cash holdings.
An unauthorized individual successfully siphoned off more than 45% of the deposits kept in one of WazirX’s multi-signature wallets, leading to a temporary halt in all services offered by the exchange. The incident has sparked an increased interest in self-storage solutions, as it underscored potential risks associated with centralized storage systems.
About a month following the WazirX hack, CoinDCX created the ‘Cryptocurrency User Protection Fund’ to provide compensation for users should the platform experience a similar incident in the future. To start, they have set aside approximately $6 million, and they plan to contribute 2% of their trading fees earnings to this fund continuously.
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2024-10-30 13:32