With self-custodial wallets, users are not reliant on any crypto exchange or wallet provider to save their private keys in their own systems.
The stir around self-custodial wallets erupts after $1bn have been reported ‘lost’ in the FTX ordeal
Photo Credit: Unsplash/ Aleksi Raisa
Owing to how the FTX ordeal unfolded and left investors high and dry, the sentiment around the crypto market has become evidently bitter with investors pulling out their money from digital assets. Under the circumstances, industry leaders have reinstated the importance of self-custody of crypto assets. In a recent tweet, Binance CEO Changpeng Zhao has called self-custody a ‘fundamental human right'. Michael Saylor, the CEO of MicroStrategy has also previously advised crypto investors to keep the control of their assets with themselves.
Zhao has recommended members of the crypto community to start keeping custody of small amount of assets to understand how self-custodial tools and technologies work.
Bitcoin fell to a year's low after Sam Bankman-Fried's FTX crypto exchange lost its standing due to liquidity and solvency problems.
Amid the market chaos, Binance-owned Trust Wallet recorded an increased footfall of investors.
Acquired by Binance in 2018, Trust Wallet is a decentralised hot wallet service, that allows people to store their cryptocurrencies and NFTs. Hot wallets are accessible online and facilitates crypto transactions between its owners and end-users via a collection of private keys stored within.
In recent days, the Trust Wallet Token rose by 80 percent to touch a price point of $2.3 (roughly Rs. 185), a Coindesk report noted.
At least $1 billion (roughly Rs. 8,113 crore) worth of customer funds have reportedly vanished from collapsed crypto exchange FTX.
It is hence expected that the concept of ‘not your keys, not your coins' could become a more understood and followed concept in the crypto world following the FTX fiasco.
To put it in simple terms, it means that if investors do not have control over their private keys, then they do not actually 'own' their crypto. With self-custodial wallets, users are not reliant on any crypto exchange or wallet provider to save their private keys in their systems, making them vulnerable target for hackers or victims of liquidity crunches.
Previously, Ledger, the France-based hardware crypto wallet company, had also claimed that it is trying to inform as many people as possible, about the uses of private and self-custodial crypto wallets.
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