Once just a technical term within the crypto ecosystem, self-custody quickly took center stage when FTX, a multi-billion dollar crypto empire, caught fire. The prolonged bear market, combined with bankruptcy announcements of once prominent crypto exchanges, it triggered a rise in awareness of crypto ownership.
The domino effect of FTX collapse It was a hard lesson that reminded users of a fundamental principle in cryptography: not your keys, not your coins. Since custody of FTX client assets was on the exchange, users faced issues when they wanted to withdraw the funds they thought it belonged to them.
Centralized vs. self-custody exchange wallets
In order to provide instant access to different forms of cryptocurrency trading, the wallets generated by the exchange take responsibility for storing and managing cryptocurrency assets out of the reach of users. Responsibly, the ownership of the funds is also transferred to the custody of the exchange. That is why various experts advise users to keep your assets in a self-custody wallet for “true ownership” over their crypto.
However, there was a reason we didn’t see mass adoption of self-custody crypto wallets before they became an absolute necessity: Self-custody requires a certain level of understanding of how crypto really works. This initial step became a stumbling block for many users until more pressing issues arose following recent developments in the space.
First, users need to create their own wallet, which is a different process than opening an exchange account with an email and password. Second, they need to understand the importance of your seed phrase and your private keys. They then need to manually transfer their funds from all other wallets to the new wallet.
Since self-custody crypto wallets were not initially developed with the average crypto user in mind, they are not known for their ease of use. In most cases, integration into a new blockchain requires some technical information to be filled out. Since most self-custody wallets do not have a fail-safe confirmation step like exchange wallets, users are one typo away from sending funds to an unknown address.
Self-custody problems generate new solutions
However, following the FTX fiasco, cryptocurrency users are now eager to shoulder that responsibility and regain ownership of their crypto assets. Noticing the shift in interest, the crypto industry is also working hard to respond to the needs of the community.
One such solution is released by the KuCoin crypto exchange. Available on mobile platforms and as a browser extension, KuCoin Wallet aims to combine the protection of self-custody wallets with a user-friendly interface that exchange users will find familiar too. To ensure that no one other than the wallet owner has access to the private keys, KuCoin worked with Hacken for the penetration test audit. With full control over their crypto and NFT assets, users can manage their portfolios across multiple blockchains in a single window.
Benefiting from KuCoin’s expansive ecosystem, the self-custody KuCoin Wallet allows users to create a free decentralized account that would work across all corners of Web3, thanks to its compatibility with decentralized applications such as Uniswap, ApeSwap, and OpenSea.
To make the transition to self-custody fun and engaging for cryptocurrency users, KuCoin Wallet recently Announced a World Cup Winners Predictions Tournament where wallet owners can participate in predicting the results of the FIFA World Cup Qatar 2022 to win $30,000 in prizes. The main purpose of the event is to familiarize users with the mindset of self-guarding while enjoying the games.
Despite its decade-long history, cryptocurrencies can still be considered a fledgling industry, especially in terms of its primary goal: redefining the future of money. There is a high probability that the FTX crash will not be the last crisis the cryptocurrency industry will face. However, key industry players that act quickly to meet new community needs, such as self-custody wallets, will help the ecosystem grow and mature in a healthy and reliable manner.
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