The recent bybit exchange hack event is a very sad situation for everyone in the market and a new discussion has started where people are talking about self custody. I have also gone to those discussions and understood that the self custody is also not the safest way because it also has its own challenges.
I mean to say that it is good if we hold our Crypto but there are situations when things can go in a different direction if it is not managed well. Currently we have two type of exchanges and these are known as centralised and decentralized exchanges.
With centralized exchanges we need not to worry about the wallet key because it remains with the exchange. In case of decentralized exchange we need to manage the key properly because this is not with anyone else and we are the only holder for the key. If something goes wrong with decentralized wallet then nothing can be done and funds are lost. In centralised exchange because we have ID and passwords and key is with the exchange so we have the option to reset it after following certain guidelines and steps according to the exchange.
I believe that we should move more towards the non custodial wallets or self custody of Crypto assets but this can be a tricky part for newcomers. I mean to say that people who are already in the market understand how things work so they might be able to Man is the key and maintain the self custody of Crypto. But the people who are new in the market it can be a challenge in task for many of them to understand it and this is why more awareness and education is required.
Obviously no centralized exchange will do it because they would never want any user to follow this because it will impact their business. These exchange is expect people to get on boarded on their platform and use their services for trading and also to keep their Crypto in their wallets. This helped the exchange to grow and if people start moving out from the exchanges towards the self custody then exchanges will have less liquidity which is going to impact their market and overall business.
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