How to keep your cryptocurrency safe in 2023-2024 after the FTX collapse: Basic methods
The basic methods of keeping investors' crypto assets after the collapse of the FTX cryptocurrency exchange were presented by the independent digital media resource Cointelegraph.
Sam Bankman-Fried’s fraud of misappropriating users’ funds has led investors to explore options that can help safeguard their investments.
The fall of the FTX crypto exchange forced many to reconsider their overall approach to investments — starting from self-custody to verifying the on-chain existence of funds. This shift in approach was driven primarily by the lack of trust crypto investors have in the entrepreneurs after being duped by FTX CEO and co-founder Sam Bankman-Fried (SBF).
FTX crashed after SBF and his accomplices were caught secretly reinvesting users’ funds, resulting in the misplacement of at least $1 billion of client funds. Efforts to regain investor trust saw competing crypto exchanges proactively flaunting their proof of reserves to confirm users’ funds’ existence. However, community members have since demanded that the exchanges show their liabilities to safeguard the reserves.
To safeguard assets from fraud, hacks and misappropriation, investors must take certain measures to keep total control of their assets — often considered as best crypto investment practices.
Move your funds out of the crypto exchanges
Crypto exchanges are widely used to purchase, sell and trade cryptocurrencies in exchange for a small fee. While other methods, including peer-to-peer and direct selling, are always an option, higher exchange liquidity allows investors to match orders and guarantee no loss of funds during the transaction.
The problem arises when investors decide to keep their funds in wallets provided and owned by the exchanges. Unfortunately, this is where most investors learn the lesson “not your keys, not your coins” the hard way. Cryptocurrencies being stored on exchange-provided wallets are ultimately in possession of the owner, which in the case of FTX users, was misused by SBF and associates.
Evading this risk is as simple as moving the funds out of the exchange to a wallet with no shared private keys. Private keys are secure encryptions that allow access to the funds stored in crypto wallets, which can be recovered using a backup phrase in case of misplacement.
Hardware wallet: The safest bet for storing cryptocurrencies
Hardware wallets offer total ownership over the private keys of a crypto wallet, thus limiting the funds’ access only to the owner of the hardware wallet. After procuring cryptocurrencies from an exchange, users must voluntarily transfer their assets to a hardware wallet.
Once the transaction is completed, owners of the crypto exchange will no longer be able to access the fund. As a result, investors opting for a hardware wallet will no longer risk losing funds to frauds or hacks happening over the exchanges.
Related: Why do the trends of the crypto market in 2023 make it necessary to own a hardware wallet?
However, while hardware wallets add to the overall safety of funds, cryptocurrencies remain at risk of impermanent losses when a token’s value goes down unrecoverable. Hardware wallet providers (Ledger, Trezor, ELLIPAL, SafePal, CoolWallet and other) have witnessed a sharp increase in sales as investors slowly move away from storing their assets over exchanges.
Don’t trust, Verify
In all the crypto crashes that happened this year — including 3AC, Terraform Labs, Celsius, Voyager and FTX — breaking of investors’ trust was a common and evident theme. As a result, the motto of “Don’t Trust, Verify” has finally resonated with both new and seasoned investors.
Popular crypto exchanges, including Binance, OKX, Bybit, Huobi, Gate.io and Bitfinex, have taken proactive approaches to showcase their proof of reserves. The exchanges provided wallet information that allows investors to self-audit the existence of their funds within the exchange.
While proof-of-reserve shares a glimpse into an exchange’s reserves, it fails to provide the complete picture of its finances as information related to liabilities are often not made publicly available. On Nov. 26, 2022 Kraken CEO Jesse Powell called out Binance’s proof of reserve as “either ignorance or intentional misrepresentation” as the data did not include negative balances.
However, Binance CEO Changpeng Zhao refuted Powell’s claims by stating that the exchange has no negative balances and will be verified in an upcoming audit.
The above three considerations are a good starting point for safeguarding crypto assets against bad actors.
Some of the other popular methods to take away control from the crypto entrepreneurs are using decentralized exchanges (DEX), self-custody (noncustodial) wallets and doing extensive research (DYOR) on seemingly investible projects.
Conclusion:
Popular methods of protecting cryptocurrencies include: using decentralized crypto exchanges (DEX), withdrawing your funds from centralized crypto exchanges (CEX), using self-custody (noncustodial) wallets, using hardware wallets and conducting extensive research (DYOR) on seemingly investment projects.
Source: Cointelegraph.com
Learn more about the best TOP 30 hardware cryptocurrency wallets
You can see this list here.
TOP 29 Hardware Wallets, the Official Online Stores
| 1 |  | Trezor hardware wallet, the official online store |  |
| 2 |  | Ledger hardware wallet, the official online store |  |
| 3 |  | KeepKey hardware wallet, the official online store |  |
| 4 |  | BitBox02 hardware wallet, the official online store |  |
| 5 |  | CoolWallet hardware wallet, the official online store |  |
| 6 |  | ELLIPAL hardware wallet, the official online store |  |
| 7 |  | D'CENT hardware wallet, the official online store. |  |
| 8 |  | SafePal hardware wallet, the official online store |  |
| 9 |  | SecuX hardware wallet, the official online store |  |
| 10 |  | BC Vault hardware wallet, the official online store |  |
| 11 |  | BitLox hardware wallet, the official online store |  |
| 12 |  | Keystone hardware wallet, the official online store |  |
| 13 |  | ProKey hardware wallet, the official online store |  |
| 14 |  | NGRAVE hardware wallet, the official online store |  |
| 15 |  | Keevo hardware wallet, the official online store |  |
| 16 |  | GridPlus hardware wallet, the official online store |  |
| 17 |  | Ballet hardware wallet, the official online store |  |
| 18 |  | OPOLO hardware wallet, the official online store |  |
| 19 |  | Foundation (Passport) hardware wallet, the official online store |  |
| 20 |  | ImKey hardware wallet, the official online store |  |
| 21 |  | Tangem hardware wallet, the official online store |  |
| 22 |  | HashWallet hardware wallet, the official online store |  |
| 23 |  | Material Bitcoin hardware wallet, the official online store |  |
| 24 |  | ShieldFolio hardware wallet, the official online store |  |
| 25 |  | OneKey hardware wallet, the official online store |  |
| 26 |  | Blockstream Jade hardware wallet, the official online store |  |
| 27 |  | Cypherock hardware wallet, the official online store |  |
| 28 |  | Keepser hardware wallet, the official online store |  |
| 29 |  | NEXA hardware wallet, the official online store |  |
TOP 20 Best Metal Cold Storage Seed Phrase Backups, the Official Online Stores
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