Is your cryptocurrency safe? | CoinGabbar News
This year, the majority of cryptocurrency investors are experiencing FOMO.
Crypto investors are concerned about their holdings after multiple debacles.
Experts suggest investors to hold crypto assets in non-custodial wallets.
The fallout of the Terra Luna ecosystem, as well as the bankruptcy
Filings of prominent crypto exchanges like FTX, Celsius, and 3AC, have sparked concerns among users about their crypto security.
However, the primary concern that led users to question the security of their crypto holdings is the mismanagement of users' funds via the now-bankrupt crypto exchange FTX. The event raised questions on the viability of centralized exchanges.
Following the FTX disaster, experts are also pushing for tighter crypto regulation. And advised investors to exercise caution while investing in cryptocurrencies. So, let's look at some measures that will help you understand how safe your cryptocurrency is.
Analyze the Proof of Reserves and Proof of Liabilities of Crypto Exchange
After the debacle, these two factors are the only ones indicating that the exchange is safe for crypto investments and holding. However, several exchanges only reveal their Proof of Reserves and not Proof of Liabilities.
Proof of reserves is a way of verifying that a platform has adequate assets to match its users’ deposits. On the other hand, Proof of Liabilities reveals how much debt an exchange owned.
Avoid holding assets on centralized exchanges
The incident raised concerns about the mismanaging of users' funds by centralized exchanges. Experts suggest users to avoid holding crypto on CEX until strict crypto regulation, which oversees exchange operations, is enacted.
However, there is another solution to this problem: storing your cryptocurrency in non-custodial wallets, which provide only a single key that is only accessible by the user.
These two must-dos will definitely ensure users’ that their cryptocurrencies are safe. Meanwhile, if you haven't already heard, the mantra "Don't Trust, Verify" has finally hit a nerve with both new and experienced investors.
Conclusion
The fact that centralized exchanges are losing viability does not imply that we should immediately switch to decentralized exchanges. Remember, DEXs are the most vulnerable to crypto hacks. As a result, you must conduct your own platform viability research or wait for strict crypto regulations.
What do you think, will the government enforce strict crypto regulations, or will exchanges introduce new safeguards for their daily operations? Share your views in the comment section below.
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