99% of People' Will Lose Crypto Storing in Self-Custody?

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In recent times after the FTX crash, people are more concerned about their crypto assets around the crypto space. They are trying to seek alternating for storing assets under their supervision. And in this case, a self-custodial wallet is the most convenient way for small crypto holders as most of them cannot maintain the hardware wallet or used to it. Also, many traders are keeping their funds in centralized exchanges until now. There is no decentralized exchange except some Defi protocols that are expensive for small retailers to spend the transaction fees! So, People use free self-custodian apps from the app stores such as Trustwallet, Coinbase wallet, and many more. But the crucial question is how safe these wallets are in users' phones. Are they capable of maintaining the security of their wallet? Are they aware of the potential attacks on their devices? Are they storing their keys and phrases properly?

In my concern and experience, the answer is no in most of cases! And as result, they lose a significant portion of their assets by phishing sites and by scamming also in many cases. Also the potential risks of the hackers! Even I have lost my assets in one of my META MASK wallets though luckily I didn't have much money there it happens to me also being a conscious person. And in recent times with the tons of FUDs, the crypto space is shaking with fear with the centralized exchanges. The outflows from the Binance are a true example of how the reaction is spreading over time when there are some problems with laws and regulation with the Govt. side with the Binance. You can read the article from Reiters here-U.S. Justice Dept is split over charging Binance as crypto world falters. The following figure shows the 7 days flows of the top exchanges and the last 24 hours flows. And when the last 7 days earlier more than 6 billions have been withdrawn from Binance while recent 24 hours shows more than 6 billions USD which is really a shocking!

Past 7 days outflows-

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Past 24 hours outflows-

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Will You Lose Crypto Storing in Self-Custody?

So, if people are withdrawing their assets, then definitely they are storing in their own wallets, and in most cases, they are not using hardware wallets which are the safest frominry aspect. But third-party apps are prone to many disasters and people are very vulnerable without proper knowledge of their safeness. And, in recent days the technology is more advanced to track you hack you, and steal your money and information from your device. Another reason people are used to using pirated software and cracked version of many paid software contains such hacking tools. Also, very few people use the full version of their Anti-virus or anti-malware software also which leads to many attacks!

And the recent claims by Binance CEO Changpeng Zhao about the fact is not just for protecting his Exchange from withdrawing funds but it has some true significance also which should be considered. He imposes the importance of holding crypto by the technical people not by the noobs as they can not protect their crypto even in their cold wallets in many cases! The lost of devices, keys and many accidents have already make a huge lost in the total amount of BTC forever which will be unaccessible forever! The full article can be read for further details from here-‘99% of People' Will Lose Crypto Storing in Self-Custody: Binance CEO Changpeng Zhao.

“Most people are not able to back up their security keys; they will lose the device,” he said. “They will not have the proper encryption for their backup; they will write it on a piece of paper, someone else will see it, and they will steal those funds. And also today, very fundamentally, if a person passes away, they don’t have a way to give to their next of kin. Whereas we have a standard operating procedure [for that].” CZ added that people who are technically capable of holding crypto safely should do so but claimed that the practice has its own issues. “I always try to educate people so they understand there are risks,” he said. “Holding your own crypto in your wallet is not risk-free; I actually think more people lose money holding their own—lose more crypto when they’re holding on their own than on a centralized exchange.”

The Glassnode statistics show that there are 10-20% of BTC is supposed to be lost for various reasons by the owners. Up to November 2022, it is roughly estimated that 2,550,615 bitcoins may be lost forever which is really a huge number while the total supply is only 21 Million! So the question arises how efficiently storing your funds in your own wallet is really thinkable and needs to revise before speculating on the idea Not Your Keys, Not Your Crypto which has become so popular in the media, especially among the crypto sphere!

How the assets are being lost?

Human error is the main reason for losing BTC. Bitcoin is designed as a peer-to-peer payment system placing control back into the hands of the owner with the requirement of proper accountability. If there is a lack of knowledge regarding private keys, seed phrases, crypto wallets, and how the three relate to the Bitcoin blockchain, bitcoins can easily be lost.

  • Losing access to a private key is the fundamental reason why bitcoins are lost. Once the private key to a specific bitcoin wallet is lost the coins are lost also stored in that wallet.

  • Incorrect transactions within the Bitcoin blockchain is immutable and, therefore, cannot be reversed. Transactions are final once confirm and if Bitcoin is sent to the wrong wallet address, there is no method to get those assets back. As a result of the wallet address being dead a permanently lost of BTC is one.

  • Lost recovery phrases consisting of 12 or 24 words - which can be entered into a new wallet if the password for the wallet is ever forgotten. However, this means the recovery phase is the final backup. If the phrase is lost, misplaced, or forgotten, a bitcoin wallet will not be recoverable.

Safeguard your assets

Cryptocurrency lets anyone become their own bank but there is an underlying risk of losing funds which should be mitigated through the following measures-

  • Education is key to ensuring the safety of your assets, don't jump into it without prior knowledge of the safety issues.

  • Backup recovery or seed phrase must be kept safely that is the only way to recover your wallet access. It is best not to carry the recovery phrase on your person or on electronic devices and it must never be shared with anyone else

  • Triple-check wallet addresses is needed before any transaction to avoid of the risk-free transaction as it is sent once to the wrong address means lost forever.

  • buying a personal cryptocurrency hardware wallet is recommended which will let your assets truly offline and will ensure no loss of your funds.

  • Make your device virus and malware-free from which you access your assets.

  • Keep a distance from any unknown links which can be disastrous for your safety!

  • Don't install any cracked software on your device which is used for the management of your assets.

  • Keep yourself updated with the latest happenings and safety measure and don't be reckless with your assets at all.

Thank you very much for your time and attention, any suggestions are welcome in the comments regarding the safeness of crypto funds. I will catch you at the next. Have a nice day!

MD AL MAHADI HASAN Welcome to Mahadi's small corner in Hive Community from Bangladesh. He is a Ph.D. student who is working at a research Institute in China. He has visited many destinations near Beijing, climbs up the great wall and mountains, tries new and exotic dishes here, tried skiing and many other events, and explored his country and want to explore the rest of the world in the future. As a crypto enthusiast, he has the hobby to learn about Blockchains, Cryptos, and their fascinating applications in the real world. He loves learning new things and tries to enjoy his life to the full. If you like his content, don't forget to upvote and leave a comment to show some love for him as a learner in the blogging sphere. You can also reblog his post if you want to. Also, don't forget to follow him to be updated with his latest posts about his life and thoughts on a regular basis including daily life and some Blockchain games such as Splinterlands.





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