Please Read and Act
Back to Basics: Learn How to Hold Your Crypto in a Non-custodial Wallet
Though, I’ve explained the importance of getting your coins off of exchanges and into non-custodial wallets, I get the feeling that some of you still haven’t done so.
I assume that part of the reason is the anxiety that comes with the thought “But, I don’t know how to.”
As a preface to what I’d like to share today, let me ask you to consider the following questions…
Would you like to:
Deal with the anxiety comes that with losing your investment if the exchange that you keep said investment on goes under — like what we just saw happen with FTX? — or
Work through the anxiety that comes with learning how to transfer your assets into a non-custodial wallet — or a wallet to which you hold the private keys for your assets?
If you’ve made the decision to do the latter, then keep reading.
I’ll start with some context regarding why learning how to self-custody your assets is important.
I shared the following commentary with The Street this week:
“Frank Corva, senior analyst for digital assets at Finder, sees a lot of FUD -- fear, uncertainty and doubt -- around the solvency of Binance.
"It almost goes without saying that if Binance goes under, digital-asset markets and the crypto industry as a whole will be set back almost irreparably," he said.
"It’s difficult to know whether people are panicking and spreading rumors about exchanges like Binance due to a PTSD response from FTX’s implosion or whether the issue of Binance’s solvency is a credible threat."
Regardless, Corva said, data show that many are moving their crypto assets from the custody of exchanges to noncustodial wallets, which give users the private keys to their assets.
"This is good in that holding digital assets in self-custody is one true way to actually own the assets," Corva said. "When you leave them in the custody of an exchange, the assets are only IOUs that are as good as the solvency of the exchange."
"And if we’ve learned anything from the FTX debacle," he added, "it’s that even exchanges that seem the most solvent may just be putting up a front."
Separately, Corva noted that crypto firm Genesis -- a major player in market making and borrowing and lending services in the crypto industry -- was the engine for crypto exchange Gemini’s Earn function, which last month halted $900 million of customer redemptions.
"Many are waiting with bated breath to see whether Genesis declares bankruptcy or whether it finds the liquidity it needs to make Gemini customers whole and to stay afloat as a company," he said.
"If Genesis goes under, digital-asset markets will likely see another leg down."
You can read the full article here if you’d like.
I’ve been sharing similar thoughts with and in bigger media outlets for months now.
Below are a list of some pieces of I’ve written for Nasdaq:
5-27-22 - Why You Should Consider Getting Your ETH off an Exchange Right Now
7-29-22 - Safety First: The Importance of Using a Crypto Hardware Wallet
8-12-22 - Where Should You Store the Private Keys to Your ETH?
11-11-22 - Once More for the People in the Back: Get Your Digital Assets off Centralized Exchanges
12-2-22 - For Hardcore Crypto Enthusiasts, There’s No Such Thing as a Safe CEX
And I’ve written many reviews of non-custodial wallets for Finder.
Here’s a list of some the pieces I’ve written for the site:
5-6-22 - Exodus wallet review
7-20-22 - Ledger Nano S Plus review
8-11-22 - Best crypto hardware wallets
8-12-22 - Ledger Nano X review
8-30-22 - Trezor vs. Ledger
11-14-22 - Trezor Model One review
11-14-22 - Trezor Model T review
11-18-22 - 12 best non-custodial wallets
12-8-22 - Ledger Stax review
Does it seem like I (+ Finder) am trying to tell you something? Yeah? Okay, good.
So, now it’s time to stop treating this newsletter like a self-help book that you read — and don’t implement the lessons from — and move your assets from centralized exchanges to a non-custodial wallet if you want to truly own the assets and not just an IOU for them.
The best hardware wallet for the value, IMHO, is the Ledger Nano S Plus (see link above).
The best software wallet, IMHO, is Exodus Wallet (see link above) — and it’s free to download.
I recommend only using the desktop version of software wallets. (But this is just a personal preference, as I don’t like keeping crypto wallet or exchange apps on my phone.)
There are ample resources out there (e.g. YouTube videos, instructions on the websites of wallet providers, etc.) that help you to transfer your digital assets from an exchange to your non-custodial wallet.
I’m not going to teach you how to do it here, because:
It’s boring and brings me no joy
It’s not my responsibility. It’s yours
The process is a bit different depending on the centralized exchange that you use and the non-custodial wallet to which you are transferring your digital assets
I will leave you with a few pro tips, though:
Double check the first four and last four digits of the public address to which you send your funds
Don’t panic if the funds don’t show up in the non-custodial wallet right away; the speed of the transaction depends on network congestion on the blockchain. Networks like Bitcoin and Ethereum tend to be slower than other networks
Send a small amount of your assets to the non-custodial wallet first as a test run. If it works, send the rest. This is good practice whenever you are transferring funds
Keep you 12-to-24-word recovery card in a very, very safe place. If you lose it and the device on which you store your private keys breaks or gets lost, all of your assets are gone
If you’re going to invest in this asset class, you have to take responsibility for the assets.
Bitcoin was designed to reduce counterparty risk.
When you leave your assets on an exchange, your assets are only as good as the solvency of the counterparty — the exchange.
Most people thought counterparties like FTX were totally trustworthy. Turns out they weren’t.
The next exchange to go may be Binance or Gemini. Or maybe they’ll be fine. My point is this: Why take the risk?
If what I’m saying sounds redundant, know that I’m saying it based on what I’ve learned in my 12 years as a teacher, which is that most people don’t learn when you say something once, twice or even three times.
So, here I am repeating myself for the nth time, because what I’m saying is very important.
There’s enough to worry about regarding the volatility of these assets to also risk losing them all together.
Because of the macroeconomic situation and the trauma that the collapse of multiple major institutions has caused this year, there’s a good chance we’ll be at these low price levels for some time.
This means that we will likely see more blow-ups before the dust totally settles.
Don’t become a victim of those blow-ups; learn to self-custody your digital assets.
This world is different from the world of traditional finance. There’s no crying to the government/the Fed when you lose money. We leave that to Wall Street. (Though, what I’m talking about here is a different kind of “losing.”)
Here, we take personal responsibility and hold ourselves accountable.
If that sounds appealing to you, great.
If it doesn’t, that’s understandable, too.
Traditional markets might be a better place for you to invest.
With all that said, if there’s one platform that I’d feel safe leaving my bitcoin (BTC) in the custody of, it would be CashApp.
Below is a tutorial on how to buy BTC with CashApp.
And if you really hate the idea of having to self-custody your assets and want to leave them in the custody of an exchange, I trust Coinbase and Kraken the most.
Now that all that serious stuff is out of the way, let’s move onto a lighter topic:
Trump Releases a Line of NFTs
Sweet Baby Jesus, did this give me a laugh.
I’d almost forgotten how insane and delusional this man is.
I highly recommend listening to The Gentleman of Crypto’s take on Trump’s NFT line. (Click “Source” below the screenshot and start at the time in the screenshot.)
Dudes literally had me laughing out loud in my office alone on Friday.
My favorite part about Trump getting into NFTs is the fact that he published this tweet a few years ago.
I mean, we know he didn’t write the text in the tweet, as the grammar was too good and it featured way too many big words, but it’s funny to see that he’s since changed his tone about crypto assets.
He probably caught wind of crypto being a grifters paradise and wanted to get in on the action.
As the Gentlemen of Crypto said, he’s gotta do something to come up with the money for his legal fees.
And that’s all for today.
Please stay safe out there in these turbulent times.
Best,
Frank
Twitter: @frankcorva
