While there are the aficionados who will say that cryptocurrencies will free us of the chains of the global financial institutions, on the occasions when the world of cryptocurrencies intersects with the world in which most of us live, the news is generally bleak. While you may not know one side of a Bitcoin from the other, you probably know that its value has crashed over the last 13 months, you may even have heard about some of some of the larger cryptohacks (that is computer heists through which digital currencies belonging to investors are stolen from crypto trading exchanges). And over the last week or so, you may have read on mainstream news sites about the death of Gerald Cotton the CEO of Canada's largest cryptoexchange QuadragaCX. The death of the CEO of a company that few had previously heard of, was news of course, because in his passing he had taken the passwords to the accounts of his customers with him. The result of this being that about $140 million of their money was stuck somewhere between this world and the celestial ether in which Mr. Cotton now resides. Of course, it wasn't quite told like that. We were fed terms such as "private keys," lack of "multi-signature protection," "cold storage wallets" and more readily understandable - "cryptofraud". Again!
I think that for all its jargon, this story is actually very instructive, but to learn our moral, we need to unpack the concepts a little.
Over recent years, as physical (or fiat) currency has increasingly been traded electronically, governments and financial institutions have been engaged in the development of ever-evolving rules to prevent money laundering and the financing of terrorism, known generally as AML (Anti-Money Laundering) regulations. Because fiat currency originates from the banks, the banking institutions have largely been viewed as the gate-keepers of these AML regimes. On the other hand, cryptocurrencies are digital means of exchange, the motivational ideology of which was to bypass institutional intermediaries (which many felt had been stripped of their credibility after the 2008-9 financial crash) and allow the holders to transact with one another directly. The result of this is that cryptocurrencies were never intended to be held by banks, and banks will not allow you to deposit your cryptocurrency with them.
So, if you can't deposit your cryptocurrency with your local bank, and it does not come in bills or coins, where do you hold it? The answer is...