Buy yourself a Cold Wallet today!!
Don't be cheap, it is expensive to be cheap in the crypto space!
By now, everyone is familiar with the case of FTX, so we will not be bothering getting into the details of that topic.
Imagine being one of the people who held their crypto tokens with FTX, seeing it all go down and not be able to withdraw your own crypto tokens!
Well, that can happen to everyone. Including you that you consider yourself an OG of crypto, and yet you have not made the move to buy a cold wallet to store your key securely. After FTX's collapse, you should really question yourself where you are holding your crypto and do you actually own them! It does not have to be an individual hack, it can be an exchange hack and all your crypto will be gone.
There is a saying in the space, "whoever owns your keys, owns your crypto"
Just because you use an exchange to trade, it does not necessarily mean you should store your crypto with them. If you hold them in the exchange, private keys are controlled by the exchange and not you.
Like we saw with the case of FTX where one billion dollars worth of crypto disappeared overnight, something similar can happen with all other custodial wallets. FTX exchange did freeze holder's wallets so they were not able to sell, nor withdraw their own tokens. We also have seen often that exchanges are constantly attacked and vulnerable to hackers, especially this year.
This type of wallet, where exchange owns your private keys is known as Custodial wallet.
There has been a push lately towards decentralized exchanges (DEX), which is a better alternative to the traditional crypto exchanges as it allow for peer-to-peer (P2P) trading of cryptocurrencies. As of now, we have not seen something that is fully trustworthy as few DEXs that exist out there have been prone to hacks already.
So what is the solution to all this? The answer is simple, a Non-Custodial wallet. One of the most popular non-custodial wallet is hardware wallet also known as cold wallet.
Why a cold wallet is better than holding your tokens with an exchange?
You control your own keys, meaning even if there is a hack in any of the exchanges you trade , you are still safe.
It does not require KYC/AML procedures which might take forever with centralized exchanges where lot of peoples' accounts have been frozen for days or even months with no specific reason.
In case of bankruptcy, your assets could be gone too. In fact if you read the Coinbase Terms & Conditions (I know you didn’t, you just hit Agree), you would see the statement below:
“..because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors”.
Which cold wallet brands are the best?
That we can’t really answer, but we do know that the most well known ones are Trezor and Ledger. If you plan on buying any type of a cold wallet, always make sure you buy them from the official website and not from third parties (meaning not from Amazon or Ebay) as they can be hacked before you even buy them.
In case you need more details on how to secure your wallet, we can probably write a thorough guide with the details, let us know if you think that would be helpful.