What can I do to avoid losing all my cryptocurrencies during the market decline phase?
The bearish trend exposes all the shortcomings and mistakes of both large cryptocurrency companies and individual investors. The “chip” in the current wave of market decline has been the massive liquidation of large firms managing billions of dollars worth of clients’ digital assets. A prime example of this is the problems of the Celsius platform and the bankruptcy of Three Arrows Capital. To avoid “going under” as brands disappear from the market, you need to keep your crypto in the right place.
Where to store your cryptocurrencies?
According to Yves Longchamp, head of research at Swiss cryptocurrency bank Seba, you need to be clear that centralised (CeFi) sites are directly up against their decentralised (DeFi) competitors. Here is the relevant quote cited by Cointelegraph.
CeFi platforms need better regulation with a focus on risk management. Regulating the DeFi sphere is difficult because you can’t put a smart contract in jail or simply shut down a decentralised app.
Bitcoin exchange rate last month
In other words, to address investors’ losses, you need to educate them and make it possible to use non-custodial cryptocurrencies – that is, those that are not dependent on centralised platforms.
In the spirit of blockchain, self-governance is key: cryptocurrency holders must own their coins in their wallets. For users to make intelligent decisions, they must be well informed about the risks they are taking.
According to MyEtherWallet chief operating officer Brian Norton, crypto investors now have enough tools to understand that they do not need to rely solely on centralised platforms to make transactions and mitigate risk.
Examples of non-custodial cryptocurrency wallets
Bearish trends are giving people the time and opportunity to organise their own secure cryptocurrency storage.
If you rely solely on centralised platforms, even when their returns are high, you are still giving up a significant amount of control over your digital assets. Self-storage is what cryptocurrencies were created for.
A hardware cryptocurrency wallet is most convenient for this purpose if you intend to store a significant amount of digital assets for a long period of time. With complete isolation from other devices and the internet, it is the best alternative to any centralised solution.
Cryptocurrency investor with Ledger hardware wallet
It should be noted that there are more than enough cases of various platforms being hacked and crypto-assets being lost in the industry. For example, last week there was a hacking attack on decentralised platform Harmony Protocol. The losses amounted to around $100 million in stolen cryptocurrency. After the incident, the project team announced a million dollar reward for information about the hackers. And by today, the prime suspect seems to have been found. It’s North Korea.
According to a report by analytics firm Elliptic, the nature and traces of the hacking attack indicate that it was carried out by Lazarus, a group with close ties to the North Korean government. As recently as April, US government agencies said Lazarus was a “state-sponsored organisation” that had been tentatively implicated in the $622 million Axie Infinity crosschain hack this year.
Harmony Protocol
As a reminder, crosschain bridges are blockchain interconnection platforms that, among other things, are often used to synchronise with sidechains, such as in Etherium. In general, they allow tokens to be transferred from one blockchain to another.
Horizon connects Harmony’s sidechain with Ethereum, Binance Chain and Bitcoin. The Elliptic report notes similarities between the Axie Infinity and Horizon attacks, confirming speculation about Lazarus’ involvement. In addition, analysts claim that funds in both incidents were laundered in a similar manner. Here is the relevant quote.
While no single factor individually proves Lazarus’ involvement, collectively they point to this particular group of hackers.
The FBI is already looking for some Lazarus members.
Other evidence includes the fact that many members of the Harmony team have ties to the Asia-Pacific region, and Lazarus tends to ‘hunt’ platforms from Asia. This may be due to the language difficulties of North Korean hackers. Also, the only time hackers have stopped laundering funds coincides with nighttime in the Asia-Pacific region.
North Korea puts a lot of emphasis on training in cyber security
So far, funds have been laundered through the Tornado Cash mixer, which allows users to confuse the transaction trail. Elliptic was able to “demix” the transaction trail of Tornado Cash and Harmony hackers, providing further evidence of a “North Korean trail”.
We believe that securely storing digital assets in one's own non-custodial wallets is a necessity. This way, the coin owner not only learns the basics of storing them properly and in parallel realises the features of blockchain in practice, but also learns not to rely on centralised platforms, which in recent weeks have been quite successful in blocking withdrawals for their users. So it's a good time to reflect on the proper storage of digital assets.
Look for even more useful stuff in our millionaires cryptochat. There we discuss many other news items.
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