[TP Academy⑨] "Exchanges are not banks"... The only technology to safeguard personal assets: "Self-Custody"

For investors shaken by the noise in the cryptocurrency market, ‘TokenPost Academy’ with 8 years of on-site experience will provide true investment standards. We invite you to embark on a seven-stage master class journey where ‘data’ replaces ‘feelings’ and ‘strength’ replaces ‘luck’ to challenge the top 1%. [Editor’s Note]

In November 2022, the world’s third-largest cryptocurrency exchange, FTX, went bankrupt overnight. Trillions of Korean won in customer assets evaporated, and investors who once believed “How could a major exchange fail?” shed tears of blood.

This incident left a painful lesson for the cryptocurrency market. “Exchanges are not banks.” Banks have deposit insurance systems for protection, but exchanges are merely private enterprises. Whether hacked, internally misappropriated, or bankrupt, your cryptocurrencies stored in exchange wallets are legally difficult to fully protect.

◆ Not Your Key, Not Your Coin

The core philosophy of cryptocurrency is ‘self-sovereignty.’ This means not relying on third parties (banks, exchanges) and directly controlling your assets.

Strictly speaking, the Bitcoin shown in your exchange account does not truly belong to you. It is just a ‘note’ issued by the exchange. True ownership is only established when you hold the ‘private key.’ You wouldn’t give someone else the key to your safe and then claim the money inside is yours.

◆ Disconnect from the Internet: Hot Wallet vs Cold Wallet

So how should you store your assets? Wallets are mainly divided into two types.

Hot Wallet: Wallets like MetaMask that are always connected to the internet. Convenient for deposits and withdrawals but exposed to hacking risks. Should only be used for small transactions or DeFi purposes.

Cold Wallet: Hardware devices like Ledger or Trezor that are isolated from the internet. As long as hackers do not invade your home and steal the device, online hacking attacks are fundamentally impossible.

Funds intended for long-term holding must be withdrawn from exchanges and transferred to a ‘cold wallet.’ This is not a choice but a necessity.

◆ Mnemonic Phrase, Never Compromise

The 12-24 words that appear when creating a wallet, called a ‘mnemonic phrase,’ are like your soul. With it alone, you can restore your wallet anywhere in the world. Conversely, once exposed, assets can be looted in an instant.

Never take photos or record it in KakaoTalk ‘conversations.’ If the cloud is hacked, everything is over. Writing it down on paper and storing it in a safe is the safest method.

Security is troublesome. Cold wallets that connect via USB and require button presses are inconvenient. But remember: “Convenience comes at the cost of security.” To protect your billions in assets, a little inconvenience is the cheapest insurance.

👉 [Ironclad Security] From MetaMask installation to cold wallet usage guide, and the three main hacker prevention rules. Practical security guidelines for asset protection are all in TokenPost Academy’s ‘Stage 1: Security & Wallets.’

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