Self custody is sexy: What every crypto user should learn from the FTX and genesis debacle
“Not your keys, not your crypto” is an oft-repeated phrase in our space. But, like a New Year’s resolution, it’s more easily said than done.
As Head of Web3 Growth for OKX, I see self-custody wallets as the perfect solution for new users to take control of their own funds while unlocking the world of crypto to more general audiences.
Crypto’s limitless potential stems from its ability to allow individuals to take full control of their finances. But there’s a trade off: ditching expensive financial intermediaries puts the burden on individuals to secure their own funds. And our industry does not do a good enough job of giving users – especially beginners – the tools and information they need to do this properly.
This past year was called the “biggest year ever” for hacking by Chainalysis, and we’ve also seen centralized entities like FTX and Genesis collapse, taking user funds down with them.
The next crypto bull market will hinge on adoption, and there’s nothing more lethal to new user growth than the potential loss of funds. Decentralization is the goal – but often it is through centralized platforms that new user flow is concentrated because of higher liquidity and a lower technical threshold.
Let’s face it – new crypto adopters can’t be expected to immediately run their own node on the Bitcoin protocol or become an ETH validator to realize yield while bypassing centralized entities that carry counterparty risk. But if their initial foray into crypto is positive, streamlined and secure, they will be much more likely to move deeper into the red-pill world of decentralization.
So much conversation in the wake of the FTX and Genesis implosions has been on Proof of Reserves (and with good reason). But exchanges need to show proof of their commitment to decentralization as well. Exchanges should invest in giving users an option to self-custody funds away from our centralized platforms.
This is exactly what my team has done with the OKX Wallet, which we launched recently to allow people to hold their own keys while giving them access to DEXs, marketplaces, and thousands of dApps.
This bear market cycle will be remembered for the fall of centralized exchanges that fashioned themselves as trading firms to the detriment of being, well, exchanges. OKX does not have this identity crisis. We are a technology company building the blockchain ecosystem of the future, with Web3 and centralized services (including our exchange) in one app. We are not and will never be traders, and we want our technology to enable as many as possible to enter the crypto ecosystem safely and easily.
There’s one thing that should be more important to exchanges than volumes, fees, and market position. That is the security of user funds – regardless of whether those funds are held on the platform or not.
More than ever, I want to use our platform to spread awareness of the benefits of self-custody so we as an industry can rebuild trust and introduce millions to crypto. This will ultimately benefit both us, and more importantly, the end user.
THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. IT REPRESENTS THE VIEWS OF THE AUTHORS AND IT DOES NOT REPRESENT THE VIEWS OF OKX. IT IS NOT INTENDED TO PROVIDE ANY INVESTMENT, TAX, OR LEGAL ADVICE, NOR SHOULD IT BE CONSIDERED AN OFFER TO PURCHASE, SELL OR HOLD DIGITAL ASSETS. DIGITAL ASSET HOLDINGS, INCLUDING STABLECOINS, INVOLVE A HIGH DEGREE OF RISK, CAN FLUCTUATE GREATLY, AND CAN EVEN BECOME WORTHLESS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING OR HOLDING DIGITAL ASSETS IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.