Experts tell what can be done to avoid losing funds in the event that an exchange disappears. I know how to be prevented
The exchanges are a company like any other. They may be more modern and technological but they do not escape the logic of the market. That’s why, when there is downsizing or more extreme cases where terminate their operations, panic grows among savers.
But all is not lost if you are cautious with investments. First of all, hThere are two key differences to note:
a crypto wallet It is an app or a device similar to a flash drive whose function is to store coins and control operations via private keys. They connect directly to the blockchain
Exchange is a company for crypto operations. For that, it opens wallets and maintains control over private keys for guard the funds. It is also used to store but the coins are not 100% of the user until you transfer them to a proper wallet
Ignacio Indaburu, Head of Operations at Satoshi Tango, points to iProUP that “in the wallets themselves, we have the access codes to enter the funds without the need to rely on that software or that device.
That is, digital currencies are stored in the blockchain: it is possible to see balances with a blockchain explorer if you have the public keybut without the private you can not do anything with them.
However, what happens if the exchange or wallet goes bankruptDoes it close or its founders disappear?
How to recover cryptocurrencies?
If it is money stored in an exchange, it will depend on the access that the company has to the private keys from each direction. “If you don’t have access, that money is lost, since we do not have the password to access the funds. Instead, if you have the private keys, it is very likely that they can be recovered without inconveniences”, details Indaburu.
In the crypto world An old saying is repeated:Not your keys, not your money“, namely, if you don’t have the keys, you don’t have the money. “It’s like leaving money in the bank: things can happen and you can lose the cash,” says Indaburu.
Along the same lines, Fernando Grill, CEO of Nxtfi, points to iProUP that if a wallet closes it should return the crypto to its original holders in an agreed manner, just like an exchange. However, that will depend on local legislation and jurisdiction in which it is located.
He adds that “with the current global regulation of crypto assets, the chances of that not happening are multiplied. South Korea, for example, pushed through regulation after the Terra crash.”
“In 2021 the deputy Liliana Schwindt had entered a pretty good project, but it did not progress. There are several presented from various parties, but it is not clear which one will advance, “she sentences.
With a more critical look, Luis Paolini, director of the Bachelor’s Degree in Business Management at the ITBAstates that an exchange is like a bank but digital: “In an exchange, you transfer money to it and it can do two things: gives you a personal or collective account. In truth, he is telling you this money is yours but it is all stored in one place, “she details.
In addition, he warns that if an exchange melts you can lose the investment. “The fact of whether you want to have the money in a physical or digital medium also plays here. If you have it, nobody takes it from you, if you put it in an exchange, you run the risk of losing it and it is unrecoverable“, he warns.
Exchanges are ideal for those taking their first steps or doing multiple fiat-crypto transactions
Where should cryptocurrencies be stored?
The answer It depends on how often the cryptocurrencies are going to be used..
The apps known as non-custodial wallets (such as Metamask, Klever, Math and the like) are one of the safer ways to store thembut they also require more advanced knowledge about how cryptocurrencies work.
Because they are connected to the Internet (and therefore more susceptible to hacking), they are called “hot”, as opposed to “cold”, such as hardware wallet (devices similar to a flash drive) waves paper walletswhich simply consist of write the private keys to a sheet (or several) of paper and only enter them in an app when operating.
“The convenience or not will depend on how much we are going to use those cryptocurrencies in the short and medium term. If we think about storing them for several years, it would be advisable to use a cold wallet“, recommends Indaburu. Grill notes that these types of wallets have cas against that they do not allow to generate profits.
“In that sense, a cold wallet would be equivalent to having cash. It’s safer, but you don’t get a return. In terms of security, it is advisable to have the keys on a physical mediumthat is to say on paper, not digitally in any type of file”, he details.
Cryptocurrencies: what must be taken into account so as not to lose them?
Users should know that the crypto world is relatively safe, although there are certain situations in which their funds can be compromised.
For this reason, experts recommend activating all available tools to protect access to wallets and accounts in exchanges, mainly the Second Factor Authentication or 2FAwhich adds a second layer of protection.
Paper wallets are one of the safest alternatives to store cryptocurrencies
To do this, when the user logs in, the app will ask for a numerical code to access the account or wallet. This is obtained by linking an authentication app, such as Google Authenticator or Authy.
Another issue that may cause concern is phishing attackstechnique in which cybercriminals impersonate a trusted person or company through email messages, social networks or WhatsApp that pretend to be true in order to obtain personal information from their victims.
To avoid falling into these traps, it is recommended pay attention to the addresses of the sites where you enter, activate the 2FA in apps that allow it and be attentive to the messages that are received: If what’s on offer is too good to be true, it probably is..
On the other hand, Grill emphasizes that the fundamental thing is “be clear if one does not own those keys, neither is the cryptoactive“, to which Paolini adds: “You open a wallet, you transfer the amount and no one is going to take it from you. As long as you’re neat about your computer security, of course.”
A) Yes, exchanges are the best option for novice usersto obtain cryptocurrencies with pesos and use services such as prepaid cards. The most advanced can use the apps without custody to own your keys, take advantage of decentralized finance and save. For those looking to hoard for long periods, the safest alternative is cold wallets.