Thanks for more background on the story, Jackie; I'd read about it previously but didn't dig down.
"Among the features of crypto, as it is often called for short, is that its anonymity puts it beyond the reach of normal regulation. According to its advocates, unlike regular money, imagined into life by governments and controlled for their own purposes, cryptocurrency is founded on libertarian and mathematical principles that assure its value by limiting supply. But a lack of government oversight means that in many ways the business of cryptocurrency has been less than transparent."
The strength of the best crypto, like the original bitcoin, is the lack of government oversight. It is decentralised rather than centralised. It's a trustless system which doesn't require (morally fallable) human intermediaries. Two mistakes made by the investors of QuadrigaCX2 was a lack of due diligence in the company before they put their money there, and knowing cryptocurrency was involved, trusting anyone else with the private keys. It undermines the whole point of using crypto. It sounds like they were greedy, stupid and lazy. It would be like giving your financial advisor the details of your bank account, together with passwords, for them to "look after".
'Super murky' [...] digital coin encryption could be cracked to get at that money, the entire crypto house of cards would collapse."
Bitcoin has now been in existence for ten years and nobody has "cracked" it. Not to say it's impossible, but it is very robust, and also the encryption can be improved in the advent of quantum computers coming on the scene. Let's say I would trust the tech more than I trust bankers ;-)
"Banks are supported by central banks. Governments insure deposits to discourage runs."
Until one day they're not. Given a moderate crisis and the insured deposits will run out well before demand. You'd need to be one of the first in line if two or three High Street banks did a Northern Rock or RBS.
"Some crypto exchanges are better than others, but for many young or inexperienced people hoping to make a fortune in the sector, it is really hard to tell if a seemingly credible operator is really just a guy in his basement with a pretty web site."
Yes, that's true. Personally, I wouldn't use any crypto exchange that has your private keys - new decentralised exchanges are on the way that should get around this.
"People assume these are active institutions that operate under rules and regulations, and they operate under very few," says Gerard. "I wish it was as regulated as gambling."
No, that entirely misses the point of them. If you're nervous about them and don't want to do your homework first, then the advice is to stay clear.