Why the only person you should trust to keep your crypto safe is YOU

Janine Grainger – Co-Founder and CEO, Easy Crypto

Over the past couple of weeks in New Zealand, news around ongoing difficulty withdrawing crypto from a well known local exchange has dominated technology headlines, and for good reason. Sadly, investors who gave the exchange custody of their funds and placed their trust in the exchange have found that this trust was misplaced. 

While we’re still waiting to learn the full details, one thing we can know for sure is that this failure will have been the result of errors in human judgement and action, insufficient risk management or internal processes;  not errors in blockchains.

In short, this was a business failure, not a crypto one. Time-tested cryptocurrencies and blockchain are infallible on their own – it’s when they come into contact with human intermediaries that things can go wrong.

What has become very clear is users should start requiring intermediaries to ‘earn’ their  trust through mechanisms such as the tighter regulation of custodians and more transparency around ‘proof of reserves’.

But all of that is window dressing. In my opinion, one of the great innovations of blockchains is being able to take control of your own assets. When it comes to crypto, the truth is that the only person you should trust to keep your crypto safe is YOU!

This means that you should have full custody of your crypto; and only you should be able to transact with it. That’s why at Easy Crypto we have always been non-custodial. We never hold a customer’s funds.

This piece covers the basics of non-custodial exchanges – including why self-custody is important; what self-custody wallets and exchanges are and why they’re essential to keeping your crypto safe. 

Why is self-custody important?

The premise of moving money outside of the control of the traditional banking system is what crypto is all about, giving us the ability to transact more freely, more fairly and more globally.

While crypto exchanges who take custody of funds represent a move outside of the control of the traditional banking system; you are just replacing them with another form of centralised control. 

“But isn’t the role of my exchange to keep my crypto safe?” This is a valid question, and the simple answer is “Yes”, but the more complex and accurate answer is that “Yes, it should be, but this doesn’t always happen…”

In the same way as within the early digital banking era, your money wasn’t always safe; by using exchanges and other centralised crypto businesses, you are potentially opening yourself to fraud, governance failures and hacking.

We believe in a different way of managing finance in which each user becomes their own ‘bank’ and manages their own crypto.

At the heart of the non-custodial exchange model lies a revolutionary approach that emphasises user autonomy and security. 

For most, self-custody represents the first time that an individual is in full and total control of their assets with no intermediaries.

It is an exhilarating experience; but with great power comes great responsibility and users should educate themselves and take this power seriously.

Self-custody wallets explained 

All of us are familiar with the idea of a ‘physical wallet’ or a ‘purse’ used to keep our notes, coins and cards safe. You may even have a digital wallet, such as a Google Wallet, Venmo or PayPal.

Your wallet with your crypto exchange is simply a further iteration of this concept and offers you a place to store your cryptocurrency.

All of these services place trust in a platform to securely store and help you transact your assets…and therein lies the risk.

Self-custody wallets (also called non-custodial wallets) are different from all of these because they offer you full control over your own assets, without reliance on any other party (such as a bank, a credit company or an exchange).

The wallet is like a secure password manager that enables you to transact on these blockchains; and this is how you become your own ‘bank’. 

Self-custody wallets are typically free. You can set up a new wallet; and as many of them as you like; and it won’t cost you anything. Transferring funds between these carries very low cost and is usually a ‘flat fee’ depending on what network you’re using.

As with the contents of your wallet or access to your bank accounts, you need to take your security seriously and have good practices in place as it is not without risk.

Read more: Level up your crypto security with our safe tips.

Enhanced empowerment and security 

One of the most significant benefits of the non-custodial approach is the unparalleled empowerment it offers to crypto users.

When using a non-custodial broker like Easy Crypto, customers are in complete control of their funds. This means that your digital assets are not susceptible to the operational risks associated with centralised exchanges.

Security breaches, hacking incidents and regulatory issues that can lead to frozen accounts are mitigated when users manage their private keys and wallets themselves.

Pioneering a non-custodial approach in NZ

Easy Crypto is a trailblazer within New Zealand’s crypto landscape. Not only is it the only non-custodial broker in the country, but it is also proudly New Zealand-owned.

This unique positioning embodies its commitment to fostering a more secure and transparent crypto trading environment for all.

By championing the non-custodial model, Easy Crypto avoids holding customers’ funds – as soon as you buy through us, we deliver directly to your wallet, where your funds are in your control.

With Easy Crypto – your funds are never locked within an exchange; and they remain within your control until the exact moment you decide to initiate a transaction. This minimises the risk of worry and frustration. 

A paradigm shift is needed

Within the realm of crypto, the adage “not your keys, not your coins” has become a guiding principle. Non-custodial brokers like Easy Crypto embrace this mantra and allow users’ to keep their private keys in their hands, empowering users to be true custodians of their assets. 

As we navigate the increasing adoption of crypto, an emphasis on control and empowerment cannot be overstated.

Easy Crypto has considered offering custodial features because this will often allow for ‘shiny’ features and more exotic trading types; but for now our priority is our customers and empowering them first and foremost. To date, self-custody is the best way of doing this.

Further reading: Learn and explore all things crypto.

Disclaimer: Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.