ICHI

Decentralized finance (DeFi) has become increasingly popular in recent years, providing users with access to a range of financial services that are not controlled by centralized authorities. However, with this increased accessibility and freedom comes a greater responsibility for users to manage their own security. One of the most important aspects of securing your DeFi assets is self-custody and the management of private keys.Not Your Keys, Not Your CryptoIf you have been following the fallout of the crypto exchange FTX, you likely heard the phrase, “Not your keys, not your crypto.” The <a href="https://medium.com/ichifarm/its-time-to-put-decentralized-back-in-decentralized-finance-eaee5d533b97" rel="noopener noreferrer nofollow">FTX collapse</a> sent shockwaves through the crypto world, with more and more people in the industry referring to self-custody in light of $8 billion of custodial consumer funds disappearing overnight.But what exactly does custodial control mean?Custodial simply means your crypto holdings are held by a third party — the exchange — and you are not the sole controller of your assets. Banks, brokers, and other financial institutions usually provide custody in the traditional financial system. However, in the DeFi ecosystem, self-custody is the norm. This means that users are responsible for managing their own assets and ensuring their own security.All centralized exchanges are custodial; they keep the private keys to your wallet — not you! With FTX, they operated no differently than any other centralized exchange in that they held onto users’ wallets and keys for them. This meant access to funds depended on the exchange’s ability to send it — which became problematic once FTX ran into its “<a href="https://decrypt.co/114269/hundreds-of-millions-of-dollars-drained-from-ftx-overnight-in-unauthorized-transfers" rel="noopener noreferrer nofollow">liquidity crisis</a>.” Sadly, this is not the first instance of an exchange misappropriating consumer funds. In 2018, Mt. Gox had a record-breaking 650,000 Bitcoins stolen from users. The company filed for bankruptcy shortly after. Mt. Gox was considered the world’s largest Bitcoin exchange at its peak, handling 70%-80% of the trading volume at the time.So why is self-custody important in DeFi?<ol><li>Increased security: When you manage your own assets, you are in complete control of your security and your funds.</li><li>Decentralization: Decentralization is one of the key principles of DeFi. By self-custodying your assets, you are being an advocate for decentralization.</li><li>Financial freedom: Self-custody provides users with greater financial freedom. Users can access DeFi services from anywhere in the world without relying on traditional financial institutions or intermediaries.</li></ol>Managing your private keys is critical to securing your assets in the DeFi ecosystem. By using a hardware wallet, backing up your private key, and being careful with online storage, you can protect your assets and ensure your private key remains secure. Remember never to share your private key, use multi-factor authentication, and keep your software up-to-date to stay ahead of potential security threats. If you want to learn more about how to keep your seed phrase safe, check out our <a href="https://medium.com/ichifarm/how-to-keep-your-seed-phrase-safe-d4da214cddee" rel="noopener noreferrer nofollow">blog</a>.Take Back ControlSelf-sovereignty is an essential aspect of DeFi because it puts the power and control back in the hands of individuals. It gives people control over their own funds and financial choices; it provides greater privacy and security. Self-sovereignty makes financial services more accessible to people who may not have access to traditional banking services. With DeFi, anyone with an internet connection can participate in the global financial system. Finally, self-sovereignty promotes transparency in financial transactions. With the blockchain’s public ledger, all transactions are visible and traceable.In summary, managing your own funds in DeFi gives you control over your assets, increases transparency and security, and allows you to participate in the innovation and growth of the DeFi ecosystem. It’s an important step towards financial autonomy and independence.Learn more by visiting the ICHI website, <a href="https://medium.com/ichifarm" rel="noopener noreferrer nofollow">Medium</a>, <a href="https://twitter.com/ichifoundation" rel="noopener noreferrer nofollow">Twitter</a>, <a href="https://t.me/ichifarm" rel="noopener noreferrer nofollow">Telegram</a>, or <a href="https://discord.com/invite/Bm6pUHjHUC" rel="noopener noreferrer nofollow">Discord</a>.

Self-Sovereign Finance: Your Keys, Your Crypto!

ICHI Foundation

Alte articole publicate pe 23 mar. 2023

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