Not Your Keys, Not Your Crypto — Centralized Exchanges Were Never in the Game

There's an ongoing debate about how to store cryptocurrencies. Crypto purists wouldn't settle for anything less than storing their digital wealth in a crypto wallet with private keys hidden away from the public. Others claim the best way is to keep your crypto in your exchange balance, as exchanges are safer and more secure than before, plus you don't have to worry about losing your keys.

In light of recent events concerning centralized cryptocurrency exchanges, crypto purists have more ground to stand on.

Celsius and Voyager Digital — What Happened?

Token values haven't been at their best in the last couple of weeks. In fact, crypto prices, in general, have plummeted since mid-2022. While most owners remain unaffected, some businesses had to file for bankruptcy, including the crypto broker Voyager Digital, suspending trading, deposits, withdrawals, and loyalty bonuses for all users. The crypto exchange heavily relied on a hedge fund called Three Arrows Capital, which could not make payments on a $650-million loan, collapsing into liquidation.

The customers who had their digital funds stored in Voyager will receive a combination of crypto, Voyager tokens, shares in the newly reorganized company, and more. They might receive similar value, but it's still not the same.

Something similar happened with Celsius, which had to pay huge debts and lay off more than 150 workers to continue operating. The platform halted all withdrawals at one point, with many users having their funds locked up with no idea what would happen.

It all comes back to this: not your keys, not your crypto.

Crypto Wallets Are Still the #1 Option

Most crypto users agree that the safest way to store cryptocurrencies is using a crypto wallet — a hard wallet, if possible, which would secure your crypto offline. In that case, the crypto belongs to you alone, and you don't have to worry about crypto exchanges going bankrupt.

Unfortunately, crypto wallets have one disadvantage many don't like — you have to hide your private key.

Your private key is your password to access your crypto wallet. The only difference between a traditional password and a private key is that the latter cannot be retrieved. Therefore, if you lose your private key, your funds are lost forever, and many centralized exchanges use that as the main argument against storing in crypto wallets.

It's no secret that a lot of bitcoins remain lost forever because people forgot their keys, usually years ago, when we still didn't understand the importance of storing our private keys. Nowadays, such cases are rare, as people have more awareness about the technology supporting cryptocurrencies and what losing a private key means. Therefore, they take various precautions to avoid losing the keys.

What Happens in the Case of Death?

Even with people understanding the risk of being sole owners of private keys, many are already taking precautions by sharing their private keys with loved ones. However, that's always a risk, no matter how trustworthy they are. Even if your closest friends and family don't betray you, there's always the possibility that someone might scam them and gain access to your digital assets.

The good news is that some companies are addressing this issue. Serenity Shield, for example, is a security system for safeguarding digital assets. It's an entirely decentralized solution aiming to secure your funds and pass them on in the event of your death.

In other words, you don't have to share your private keys with anyone when using Serenity Shield, and the decentralized protocol will ensure they are shared with the right people when the time comes.

Final Thoughts

The beauty of the DeFi space is that it's still very young, and some really talented people are working on it, from upgrading crypto wallets to improving the rest of the crypto market.

There is no doubt that we'll be forced to stand up whenever the industry falters, or individuals make mistakes, but each new step comes with a solution to previous challenges. Hopefully, exchanges will become more secure and trustworthy in the future, and our wallets will offer a solution that will reduce all the stress related to our private keys.