PSA: Not Your Keys, Not Your Coins
Another giant platform in the crypto world has fallen from grace. FTX.com announced their insolvency last week resulting in the loss of billions (with a Big “B”) of dollars worth of their client’s funds.
In 2014 the world witnessed the infamous Mt. Gox hack that resulted in a global shockwave of losses and fear of third party fallibility. Within the span of 2018-2019, Canadian cryptocurrency platforms QCX, EzBTC and Einstein Exchange all collapsed — with their customers suffering a total aggregate loss in the hundreds of millions.
Now this week, as the pattern seemingly continues, FTX.com has lost (or arguably/allegedly stolen) north of 1 billion USD — which is a rough estimate and expected to grow as the investigation unfolds. A lot of money has vanished for many people, again. How does this keep happening? Let’s take a look at what these exchanges had in common.
What Is Similar About These Failed Platforms?
A common denominator of these failed exchanges that resulted in the mass financial pain for investors in each case, is that each held custody as a third party over their client's funds. When a third-party intermediary holds crypto custody over a client's funds, it gives them access to control/transfer without the owner’s authorisation.
Entities should not perform such actions, but history has shown us ethics isn’t always top priority with custodial exchanges. If you’ve ever heard the phrase, “Not your keys, not your coins” — instances such as the FTX fiasco give credence to the essence of these cautionary words.
We’ve seen this happen in traditional finance as well. Goldman Sachs, Bear Stearns, Lehman Brothers in the USA and others around the world are among some examples. Although more publicly trusted than a crypto exchange that was created 3 years ago by a 28 year old — no legacy bank or financial provider seems to be impervious to the nature of capitalistic failure.
Knowing this, we always assume an element of risk when handing over funds to a third-party custodian. Once your crypto keys or control of fiat funds are given to a centralised entity, an element of trust in that party is then enlisted.
There has been an explosion of crypto exchanges popping up across the globe geographically and online, so how do we know which ones are safe and which ones will be the next FTX disaster?
MyBTC.ca’s Commitment to Safe Crypto Trading
The recent FTX-quake has rocked the cryptoworld and has tested the faith of many. MyBTC.ca does not have to reassure our valued clients that their crypto assets are safe and secure within our custody, because we are non-custodial, but what does that mean?
MyBTC.ca realised the inherent risk of third-party trust years ago and made a decision to never hold onto our client’s Bitcoin or other crypto for them and educating the crypto community to “Be Your Own Bitcoin Bank ” (BYOBB) along the way.
When selling your Bitcoin or Ether, your crypto is automatically sold at an attractive spot rate after 2 or 6 confirmations, respectively, on the blockchain. Doing so gives the user the ability to cash out for CAD directly to their bank account immediately. The faster our clients’ receive their profits the better and happier all parties are in the end.
Why MyBTC.ca is the Safer Choice:
How Do I Know MyBTC.ca Won’t Go Belly-Up?
With all due respect to our clients, MyBTC.ca’s reputation and stability as a leader in the Canadian crypto space since 2016 is far more valuable than our clients' money. The BYOBB mantra has done both our clients and our company well and serves as a reminder of how to keep us connected to our crypto roots.
Controlling one’s own coins gives the advantage of trustlessness that is adherent to the Bitcoin protocol — which is a cornerstone of the foundation that supports the bitcoin network.
MyBTC.ca has structured our platform to be non-custodial specifically to eliminate custody related security concerns. This has given our platform's users protection from the ongoing FUD and domino-effect contagion that has been wreaking havoc over the last week as a result of the FTX meltdown.
MyBTC.ca understands the risks of any crypto-asset related activities. This is exactly why we offer a self-serve over-the-counter (OTC) model brokerage of services — to ensure that these risks have been properly assessed, addressed and mitigated as much as possible. After all, it’s very difficult to lose someone’s bitcoin without custody of it in the first place.
Since we don’t offer a built-in wallet to hold customer crypto and your CAD user balance are always available to withdraw or buy crypto, you are never at risk of an FTX insolvency-like scenario.
By performing our duties with careful consideration and due process, MyBTC.ca can offer a superior experience when acting as a money service business (MSB). As a national brand and federally regulated entity, we treat our compliance obligations very seriously and take pride in satisfying our regulatory requirements.
If you'd like to see what others are saying about our product and service, we encourage you to check out our customer reviews online:
Any Tips or Suggestions on How I Can Avoid Losing Funds?
Yes, we can help. After viewing the recent news cycle you may be reevaluating your assets’ security and safety. Here’s a few tips to help keep your funds safe and sound in your control:
Perform your due diligence
This is important. Research any platform or exchange you are thinking of sending funds to and see if you can detect risk factors. How long have they been around? Where is the company located? Are they offering a deal that is too good to be true?
There’s no such thing as free money. A good rule of thumb is: “If it’s too good to be true, it probably is. Beware the human condition’s innate susceptibility to greed, stay away from “guaranteed profits” or “always win” offerings.
If a company is located in a country you need to Google to locate on a map, you might want to consider something closer to home. Many platforms/exchanges/sites that operate offshores are more risky as they don’t fall under the judicial jurisdiction umbrella as they would being located in Canada. Keep your money in the Canadian economy, buy/sell local and steer clear of people in different countries who are interested in making you money.
Own the keys to your crypto
If you have the keys, you’re in the driver’s seat and have full control over your coins. We can’t stress this enough — Be Your Own Bitcoin Bank. You have a 100% better chance of not having your crypto lost or stolen by a third party if you never give a third party control of your funds.
Many of us use centralised crypto exchanges to trade cryptocurrencies. There are a number long-running, popular and somewhat trusted exchanges out there that offer beneficial services for trading. We would suggest never sending an amount of funds that you aren’t willing to lose and don’t store funds on exchanges for lengthy periods of time. The longer you store funds on a centralised exchange, the higher the chance of something going wrong.
When in doubt, cash it out
Make sure you can withdraw your funds without issue. Remember: an account balance on a screen is meaningless. An exchange could show you that your account has $350,000 within its balance, but do you really own that amount? Once your funds are actualized by converting into fiat currency, or your crypto is sent to your personal wallet that you have full control of and confirmed on the blockchain, only then are your funds actually yours.
If you ever have a gut feeling something isn’t right, doesn’t add up or is too good to be true, withdraw your funds immediately. Always a good idea to add crypto to your cold wallet or a hot wallet that you’re in full control of so you can sleep easy.
A Final Word
This week FTX clients around the world are re-reflecting on the power of crypto custody and people are reconsidering what’s truly at stake when a third party controls the private keys to their crypto.
We here at MyBTC.ca took the risk out of buying and selling bitcoin and ether so Canadians can rest assured knowing that when they wake up, their coins will be in their control and not someone kicking it in the Caribbean.
Do you have questions or concerns? We’d be happy to help and assist you with your request.
Contact our industry leading customer support anytime and let’s talk.