The collapse of crypto exchange FTX has led to great concern and distrust among many crypto investors. Trust in central parties within the world of cryptocurrencies has plummeted, and that is only logical. This has led to both crypto investors and central crypto exchanges adjusting their policies.
Investors are opting en masse to private keys of their cryptocurrencies. For example, you could read in the Bitcoin news earlier that the monthly bitcoin (BTC) outflow on exchanges is a new all time high had reached. Investors are increasingly taking matters into their own hands to ensure the safety of their investments.
Trust crypto exchanges
On the other hand, the crypto exchanges are trying to restore confidence in them as much as possible. For example, the largest crypto exchange in the world, Binance, was the very first party to promise to expose their reserves. This is also called one Merkle-tree proof-of-reserves and means that crypto exchanges will demonstrate in a cryptographic way that they have sufficient reserves in cash. Many other parties have followed Binance and also want to offer full transparency to their customers.
How are your crypto coins safe?
‘Not your keys, not your coins’ is a well-known saying in the crypto world. This relates to the fact that when one chooses to leave their crypto assets on an exchange, that exchange actually owns ‘your’ crypto coins. You are not the one who has the private keys in your hands. The very best option is therefore to send the funds to your own wallet. This way you have the private keys in your own hands, which is proof that you are the owner of the crypto coins. These private keys are used to carry out irreversible crypto transactions.
A hardware wallet is the most secure option to send your crypto coins to. This is a small device where the private keys are stored offline. This also makes it insensitive to viruses and malware. Ledger and Trezor are currently the largest hardware wallet manufacturers.
The current bear market has proven more than ever that you cannot fully trust any party. The collapse of Celsius, BlockFi, Three Arrows Capital (3AC), Voyager Digital and FTX, among others, has led to the motto ‘don’t trust, verify’ has come to the fore.
