The bankruptcy of FTX caused a significant collapse in the cryptographic ecosystem, which makes it necessary to protect yourself in future scenarios.
FTX’s bankruptcy echoed a resounding crash in the crypto ecosystem. In just a few hours, the decentralized exchange platform that had been the industry leader until then came crashing down. Thus, the fairy tale of its ex-CEO Samuel Bankman-Fried became a drama, dragging unsuspecting victims all over the world.
Therefore, it is essential to learn how to protect yourself against these types of disasters. Even if zero risk doesn’t exist, there are still good practices to approach it to keep your cryptos safe, such as offline storage.
Hot Crypto Storage in Small Doses
The wallet is the tool par excellence that allows you to manage your cryptos. The protection of the latter should be a priority when you decide to take the step into the cryptosphere. You can keep your assets online, meaning on the Internet, or offline, meaning off the Internet.
By storing your crypto online or hot, you transfer the responsibility of managing your keys to a third party when it goes through a centralized exchange (CEX). As a result, you risk repeating an FTX scenario. In other words, you give someone else access to your vault and hope they put it to good use. It’s a risky bet that often leads to mishaps.
Even when you choose a non-custodial wallet such as Metamask, where you manage your keys, the risk of your account or platform being hacked is just as prevalent. As long as your wallet is connected to the internet, it will always be vulnerable.
It can be tempting to get carried away with the ergonomic experience and free nature of an online wallet. However, you are exposing yourself to malicious acts, the consequences of which can make you lose all your cryptocurrencies. Therefore, it is recommended that you keep in this type of wallet the minimum you need to make your immediate transactions. For the rest, you have cold rooms.
Offline Wallet, Guarantee of Optimal Security
Putting your assets in an offline wallet gives you full responsibility for managing them and their keys. A wallet disconnected from the internet, or a cold wallet, is the safest solution to keep your cryptos with complete peace of mind. This cold storage can take the form of a paper wallet or a hardware wallet. You can carry it with you as your fiat currency wallet.
Nowadays, caution is necessary at all times. Cold or offline storage remains to this day the most efficient security solution for your cryptos. This gives you responsibility for managing your assets. It also goes far beyond keeping the keys in a safe place. You also need to keep up with the news. It is your responsibility to stay informed when investing in cryptocurrency.
By Audy Castaneda