Don’t lose it all, decentralize and take control
When the all-in-one crypto banking provider Celsius, froze withdrawals and filed for bankruptcy, over one hundred thousand customers instantly lost access to their money. For many, who were attracted to the generous interest rates, it was their life savings.
It’s a far cry from the original idea of cryptocurrency where anyone could be their own bank with complete access to their funds. It is not the first to collapse and it certainly will not be the last, particularly if this bear market continues.
At present the future of Celsius is unclear, although it should not come as a surprise if it goes the way of a string of failed enterprises like Mt Gox, Bitfloor, Mintpal, Cryptsy, Gatecoin, Bitgrail, or QuadrigaCX which featured on a Netflix documentary.
The former is a mere handful of names from a long list of exchanges, or crypto custodians, that have been hacked, horribly mismanaged or customer funds have vanished along with the owners. You might think that your exchange is trustworthy but everyone is vulnerable and for every exchange with a large pool of funds, there is a long list of hackers greedily eying an exploit for those riches.
With its listing on the Nasdaq, Coinbase is generally the gateway for many new users into the murky world of cryptocurrency but their CEO, Brian Armstrong, has been forced step in and clarify a new disclosure in the firm’s 10-Q filing stating that customers ‘could be treated as the company’s general unsecured creditors in the event of bankruptcy was required by the U.S. Securities and Exchange Commission.’
The confusing legal language sparked an ominous ripple through the entire industry and people took to social media urging all users to withdraw funds from exchanges.
Armstrong was forced to explain that customer funds are safe and the company’s institutional clients have “strong legal protections” in their terms of service and Coinbase has moved to update their terms of service for retail clients to offer the same level of protection.
However, he added ‘That a court could consider user assets as part of the company if bankruptcy proceedings were to take place.’
The only way to guarantee your funds remain yours is to run your own wallet and hold your coins on it. It’s vital that existing crypto users and new entrants into the space understand the mantra of holding cryptocurrency ‘Not your keys, not your crypto’.
If you have deposited funds into an entity like an exchange, then it’s vital you understand they hold your coins in their wallets and it requires complete faith on your part that they will allow you access to your crypto when you want it.
Unlike regulated banks, governments have been warning of the associated risks with cryptocurrencies and are unwilling to support crypto projects as they would traditional banking institutions. It means we may see further numbers of crypto users left stunned, panicked and with a sinking sense of fear as withdrawals are frozen indefinitely and their funds are as good as gone.
There are many reasons people hand over control of their crypto to a third party. Many find the thought of setting up their own wallet an incomprehensible mystery, or too much like hard work. Others claim they need coins on an exchange to trade but with the majority of novice traders losing funds with each poor trade, it makes better sense to simply hold and keep their funds safe. Plenty have been enticed by generous interest rates but if your crypto is mismanaged then ten percent of nothing is heart-breaking.
Alongside the risk of losing everything, there is the inconvenience that comes with granting others control of your money, where accessing your funds provokes rigorous Know Your Customer (KYC) checks and biometric identification. And then users often need to wait days before funds are cleared.
It’s your money and it’s not up to you to jump through bureaucratic hoops to access it. Now is the time for us all to create our own decentralised wallet and store our funds securely.
Launched in 2014, Nexus (NXS) is a next-generation blockchain technology that is re-building the internet from the ground up. The developers have a vision for the blockchain that will benefit everyone, while the community has a passion to decentralize the world and take back control from overreaching centralized authorities.
The Tritium wallet has both a desktop and mobile version that are the official and only wallet to store and transact NXS coins and tokens on the Nexus blockchain. Both are quick and easy to install and download, while the one-click bootstrap option saves days of downloading the Nexus blockchain.
Simply create an account and access your NXS anywhere, anytime. The fully customizable wallet then requires you to login with a username, password or PIN which removes complicated aspects of self-custody of backing up and managing a wallet files. Unlike other cryptocurrencies, it’s not possible to send to an invalid or non-existent address and users can send NXS to usernames replacing the need to copy and paste large addresses.
As a peer-to-peer cryptocurrency, Nexus provides low-cost, borderless and secure transactions in under a minute.
Creating your own wallet, instantly puts you in charge of your money and provides you with economic freedom. With this freedom comes true responsibility for the safety of your own finances. You personally own your NXS and Nexus Wallet, they are not governed by any central authority.
When you hold the keys, it’s your crypto and if securing the safety of your own funds isn’t your primary motivation for self-custody then perhaps the option to stake your coins to receive rewards while securing the NXS blockchain, will provide extra incentive?
Staking is an energy efficient form of mining performed with a Nexus wallet that maintains a continuous internet connection. You are rewarded NXS at a rate of 0.5% to 3.0% per year on your staked holdings, with the rate determined by a time-weighted trust score. Further planned upgrades to the Tritium wallet include pooled staking, where users will not need to maintain continuous connection.
Taking control of your own finances was always the primary goal of cryptocurrency, holding your own coins has never been easier and with users’ funds vanishing at alarming rates there is every reason to take control of your economic freedom. Self-custody is the only way to ensure your crypto won’t vanish, through no fault of your own.
Information on Nexus, their wallet and the roadmap can be found on their website. However, while certain events mentioned in this piece are factual, the advice offered is purely opinion.