Self-Custody is More than a Feature, Says Dennis Jarvis

When the markets are on an uptrend, many are the people who feel more comfortable putting cryptos into trusted third parties. Good examples are centralised exchanges and lending platforms that promise high returns. However, most good times are pretty short. 

Presently, the monetary policies are tightening, and crypto companies are getting exposed to liquidity risks. If you bought crypto assets that have plunged into the red, the danger of exposure to risks looms, argues Jarvis, the CEO of Bitcoin.com.

If You Do Not have Crypto Keys, the Coins Are Not Yours

Almost everyone in the blockchain and crypto industry has heard of this phase at one point or another. The crypto markets are currently in contraction, which means that leveraged businesses come with higher chances of failing. Worse still, we regularly get reports of unscrupulous companies using their customers’ funds because of the contraction. 

The best advice to crypto enthusiasts is that they should move their money from centralised services into self-custodial wallets. Ensure that the wallets are 100% self-custodial, or risk losing your asset. 

The Growing Risk of Exposure Associated with Crypto Products 

According to Jarvis, self-custody will not clear all the risks associated with failing projects. We saw this in May 2022 with the collapse of the Terra ecosystem after UST stablecoin lost its dollar peg. The perils of LUNA/UST became bare for all because the transactions were on-chain and transparent. But even with this, both sophisticated and retail users’ investments were wiped out when UST stablecoin collapsed. 

Centralised cryptos are far worse since their finances are shrouded in mystery. This makes it impossible to foretell the impending problems until they have happened. One good example is the Celsius network’s current predicament. 

Celsius Network, one of the leading centralised borrowing and lending crypto platforms, abruptly announced they were freezing all customer assets. It came as a major shock to users because the CEO had refuted that there was a problem. Check out the short conversation on 12th May on Twitter, a day before they froze withdrawals. 

I hope retail can get out. I’ve heard about accounts being locked. That would be similar to LUNA. We shall see,” expressed a user on Twitter, going by the name Mike.

 “Why spread FUD and misinformation? If you are paid for this, then let everyone know you are picking sides; otherwise, our job is to fight Tradfi together..,” responded Alex Mashinsky.

The following day, Celsius released a statement saying that they are pausing withdrawals, Swaps, and transfers between accounts. After this statement, some customers have indicated that their collaterals have been liquidated, even though they have ample assets to jump to as collateral for loans. However, they could not do so because the accounts were frozen. 

Self-Custody in Cryptos is Your Insurance

Self-custody is, indeed, more than insurance. It is good insurance against centralised third parties, be they governments or financial organisations. Like in the conventional markets, insurance comes with some premiums, and you should treat self-custody in the same light. This premium comes in the form of personal responsibility, and the benefit of total peace of mind. 

Make sure to select the best self-custody wallets for assurance that only you have access to the stored coins. To get even more value from self-custody wallets, go for the models that allow you to store multiple coins, from Bitcoin to Ripple and ERC-20 tokens. 

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