Not Your Keys, Not Your Coins
One of the things a newbie must learn when they're interested into cryptocurrency is that “not your keys, not your coins” this is just a simple phrase but means a lot when everything goes wrong on the platform where you put your cryptos.
There are two types of wallet where we can store our cryptos the custodial and non custodial wallets. Custodial are those on chain wallets that you have full control of and has “seed phrase” while the noncustodial wallet are those wallets from exchangers like Binance, Kucoin, Bityard and etc or a lending platform such as Celsius, Nexo, Blockfi and more.
Custodial wallets example are Bitcoin.com, Metamask, Trust Wallet, Ledger and more that provides the user a private keys.
Not your keys, not your coins
It is important to understand this phrase as it will help user or investor to keep their funds safe.
Exchanger had full control of your wallet and funds
This is the best example of an exchanger having full control of your wallet, they hold the private keys for you and they can do whatever they want to your account.
Just like the biggest crypto exchanger in the world which is Binance pausing $BTC withdrawals, reasoning the stuck transaction which is very odd because it's already a normal thing on BTC network since it is not scaling anymore.
Last time, they also keep pausing BCH withrawals for no reason but the truth is that they don't have enough BCH in their vaults for withrawals.
Another thing is that, they can peek on your wallet how much is your holdings and they can be an asset of any entities to track your wealth since they have full control of your account.
Although Binance is the largest crypto exchanger with a good reputation for now (but very bad with BCH), everything can happen if Binance team of CZ thinks of running away with users money deposited on his exchanger.
Celsius (Lending platform) halting withdrawals
Another one great example is the Celsius platform that sends every users a memo message via email that they are halting withdrawals. Celsius is a lending platform, where you can deposit your crypto and have a little interest while holding it on their platform.
We are writing with a very important message for our community.
Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.
Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.
We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.
We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.
We thank the incredible Celsius community for your support today. It is our pleasure to serve you. Our operations continue and we will continue to share information with the community as it becomes available.
Sincerely,
The Celsius teamSource: Celsius
Above is the email sent to me giving notice that all withdrawals or transferring crypto to other accounts has been paused. I opened Celsius account but I haven't put any crypto in it, I am skeptical as well especially when “Pantera” wrote how shady the Celsius platform is. Risking your crypto for a 5-10% interest is not worth at all, if you don't have the full control of your funds and likely possible to lose it when bankruptcy or the platform runs with all the funds deposited in there (ponzinomics) happens.
One reason why these exchanger and lending platform halting withdrawals at the moment is that due to the extreme condition of the market wherein everything is dumping. They are doing all the measures to stop investor on pulling out their cryptos to avoid bankruptcy or they're already starting to get bankrupt because they don't have the exact amount that can meet all users withdrawals demand.
We we're talking in our Telegram chat about what happened to Celsius and above image is my sentiment, yes we all know crypto is very volatile. It's fine seeing our crypto changing it's price rapidly but not letting us withdraw it is another story.
If those exchanger and lending platform got bankrupt there's no more chance getting back our crypto, whereas if we keep it in custodial wallets nobody can touch it, it can recover anytime but when a noncustodial wallets got bankrupt it's goodbye money for real.
I still hope, Celsius withdrawals will be back soon as I have some friends lending their cryptos in there. I am not scaring any of those investors put their cryptos in Celsius, this is the reality. Some of them are aware of the risk but blindly take it for a little gains, while some doesn't know at all this is why I wrote this article to let those newbies knows how important this matter is.
I hope now we see how important to understand that not having our own keys is not owning our coins, we let those exchanger and lending platforms own it.
More Crypto Articles:
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Date Published:
June 14,2022(Article#:6)
Buti nabasa ko 'to, Ate. Planning pa naman ako na mag-start sa spot trading using Binance para naman makabawi kahit paano sa mga losses ko~
May iba pa bang wallets na effective for spit trading aside kay Binance, Ate? And, any other advice? :)