The lesson from FTX collapse: self-custody is absolutely necessary now!
The reason why you need to safeguard your crypto assets using a non-custodial wallet
FTX collapse highlights the importance of self-custody for cryptocurrency users. Non-custodial wallets are wallets that are not held by a third party, such as a centralized exchange (CEX), but instead by the user themselves. This means that the user has full control over their funds and can access them at any time.
The beginning of the end for FTX is allegedly to be when they made the decision to lend billions of dollars of customers’ deposits to fund risky bets by Alameda, a sister company to FTX. A CoinDesk report citing Alameda's balance sheet threw the entire cryptocurrency market into panic, and the resulting FUD saw FTX users scrambling to withdraw their money from the exchange. Withdrawals were eventually halted by FTX, in what could be described as a violation of the users' agreement.
Further concern was raised by a report stating that FTX users in the Bahamas, the company's home country, were reportedly permitted to withdraw their funds while users outside the country were not. This could be described as an example of irregularities peculiar to centralized exchanges. Many users are in despair because their funds might be lost forever.
Following the collapse of FTX, Binance CEO CZ tweeted, "your keys, your coin." A popular crypto cliché that emphasizes the importance of self-custody of one's coins.
FTX's declaration of bankruptcy has also prompted other prominent figures in the cryptocurrency sector to call for stricter government regulations to guarantee the security of investors' funds. For example, Brian Armstrong, CEO of Coinbase, tweeted a few days after the FTX collapse.
He is suggesting the importance of building a stronger ecosystem by having DeFi and self-custodial wallets while working with policymakers to enforce stricter rules on CeFi.
The Benefits of Using a Custodial Wallet for Your Crypto Investment Portfolio
In the aftermath of the FTX crash, CZ reiterated in another tweet the necessity of protecting your funds as a "fundamental human right" and the reasons you should start using non-custodial wallets right away.
Non-custodial wallets are a much safer option for cryptocurrency users. By holding their own funds, users can be sure that their funds are secure and that they have full control over them. Furthermore, non-custodial wallets are often more secure than custodial wallets, as they are less vulnerable to hacks or other security breaches.
The use of non-custodial wallets is also beneficial for the wider cryptocurrency ecosystem. By taking control of their own funds, users are helping to reduce the risk of large-scale fraud and other security breaches by malicious players. This helps to ensure the health of the entire cryptocurrency market, which is essential for its continued growth and development.
Non-custodial wallets enable you to fully utilize Web3 by giving you access to DApps (decentralized applications created on the blockchain), such as the UBET Sports platform.
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