Self-Custody: Not your key, not your crypto
As a crypto enthusiast, you should be familiar with the phrase “Not your key, not your coin,” The last few weeks’ events should have made the statement more meaningful to you and not see it as just another cliche in the crypto world.
The latest fiasco that occurred in FTX eventually led to the bankruptcy of the once second-biggest exchange in the world, further reinforcing the need to have complete custody of your digital asset.
The genesis of “the great revelation.”
Not like the gospel of self-custody has not been in the crypto space for long, as AirGap has consistently preached the need for crypto enthusiasts to adopt this method.
However, what hit the crypto ecosystem like the “iceberg hitting Titanic on the Atlantic ocean in the evening of July 14, 1912”. CZ, as the CEO of Binance, stated in his tweet FTX might have some shady dealings.
However, the embattled former CEO of FTX, Samuel Bankman-Fried, denied the situation and said FTX is solvent and it was an attack from a competitor.
On the 8th of November, 2022, SBF, the former CEO of FTX, confirmed the embattled exchange is insolvent and will be acquired by Binance in a non-binding LOI, pending DD (Diligence).
Users started withdrawing their funds from the exchange. However, along the line, withdrawal was paused. This is comparable to a “bank run.” As many of you might know, financial institutions like banks and exchanges do not have all the money they secure for their clients in a vault. Instead, they use a big part of it for speculation, lending, etc. To estimate how much is really in their vault, in the European Union, banks need to be only 8–12% liquid. So when a large mass of people try to withdraw their funds simultaneously, the institution gets into trouble because a fraction of the demanded funds is in the vault. And such runs are more common than you might think. see the list of bank runs.
In the old days, people would refer to the phrase “Cash is King” because only if you truly could hold it in your hands, you own the money; in the crypto world, the equivalent would be “Not your key, not your crypto.”
What will happen to users’ funds on FTX with the suspension of withdrawal and filing for bankruptcy?
Your guess is as good as mine. REKT!
Lessons learned in the past weeks
With millions of individual and corporate bodies losing their funds on FTX, it was reported that massive withdrawals have been seen on exchanges as data from analytics provider glassnode shows that crypto enthusiasts are embracing self-custody.
According to a Tweet posted on Nov. 13 by Glassnode, Bitcoin exchange outflows have hit near historic levels of 106,000 BTC per month.
According to the report, this has only occurred three times previously — in April 2022, November 2020, and June/July 2022. The report further states around 90,000 Bitcoin wallets received the asset from exchange addresses on Nov. 9.
This showed that one lesson was learnt this week, the need for a self-custody wallet, where you have complete control of your cryptocurrency.
What is the difference between a custodial wallet and a Non-custodial wallet?
Non-custodial wallets are the exact opposite of custodial wallets. Unlike custodial wallets, non-custodial wallets allow you to generate and store your private keys. It means you are responsible for the security of your crypto assets.
A custodial wallet is one in which a third party holds the private keys. An exchange wallet is a custodial wallet in which exchanges hold private keys on behalf of their users.
Getting started with AirGap
It is better to be safe than sorry. The first step towards securing your digital asset is downloading and using the AirGap Wallet and Vault.
These tutorials and guides will help you to get started, and it’s a seamless process. The AirGap team understands that sometimes language might be a barrier, to fix this, the tutorials on getting started with AirGap have been translated into Russian, Spanish, Chinese, traditional Chinese, and French.
Feel free to share these tutorials with your loved ones so they can have a secure setup as well.
Download AirGap
AirGap Wallet
📱 iOS — App Store
📱 Android — Google Play (GitHub APK)
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AirGap Vault
📱 iOS — App Store
📱 Android — Google Play (GitHub APK)
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