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Elon Musk, the CEO of Tesla, does not support any centralised bitcoin exchanges. Musk, a fervent proponent of cryptocurrencies, wants users to have control of their ‘keys,’ rather than relying on cryptocurrency exchanges like Robinhood or Binance.
After a recent Twitter dispute between Musk and Binance CEO Changpeng Zhao, this became evident. Regarding the recent DOGE incident at cryptocurrency exchange Binance, the billionaire investor and creator of SpaceX expressed concern on behalf of Dogecoin holders. There were multiple erroneous dogecoin transactions as a result of the problem, with some users reporting that their accounts were locked.
“What’s going on with your Doge customers?” Musk inquired of Zhao (CZ). “It sounds dodgy,” he adds.
Musk recently reacted to a tweet from Bill Lee, an investor in Musk’s enterprises, by saying that the assets should not be considered “their own” until the wallet keys are in the user’s control. Tesla’s CEO wants customers who possess digital assets to have control over their private keys rather than entrusting them to a crypto exchange. This is why.
Crypto exchanges come in a variety of shapes and sizes.
Cryptocurrency security is primarily determined by the cryptocurrency exchange you use. An online marketplace where users may buy, sell, and trade bitcoin is known as a cryptocurrency exchange. Users may deposit fiat cash and utilise those funds to buy cryptocurrencies online, similar to how an online brokerage operates.
There are two sorts of cryptocurrency exchanges: centralised and decentralised, each with its own set of advantages and disadvantages in terms of security and dependability.
You would be employing the services of a corporation that enables crypto to crypto and crypto to fiat transactions between two or more persons if you wanted to use a centralised cryptocurrency exchange like Binance, WazirX, CoinDCX, and so on.
When enrolling on such platforms, users are required to provide Know-Your-Customer (KYC) papers. Users may deposit money and purchase or trade crypto currencies after signing up. The exchange then becomes the custodian of your digital assets as well as your ‘private keys.’
It’s worth mentioning that digital currencies like Bitcoin, Ethereum, and Dogecoin are kept in a ‘wallet,’ which can only be accessed with your ‘private key,’ which is the crypto equivalent of a super-secure password, and without which the crypto owner cannot access the money.
Furthermore, centralised exchanges do not provide you a private key to your cash, but rather take control of your keys. As a result, when you wish to trade or conduct a transaction, the exchange authenticates it on your behalf and according to your instructions. When a crypto deal is completed, the exchange usually updates the balances in both parties’ accounts to reflect the transaction on their app or website.
This implies that these exchanges keep a vast quantity of user data, including private keys. While crypto exchanges maintain that the data is safe, there have been occasions when hackers have stolen crypto assets worth millions of dollars. A hacker stole $613 million in digital currency from the token-swapping site Poly Network in August, for example. While the firm claims that the hackers responsible for the crime have already returned roughly half of the tokens they took, there are no certainties in the realm of cryptocurrencies.
In addition, decentralised exchanges (DEXs) do not keep clients’ private keys, rendering any hacking efforts futile. Peer-to-peer transactions are made and settled between two people.
Users may exchange cryptocurrencies between wallets using DEXs. DEX transactions are carried out on a blockchain, such as Ethereum, Binance Smart Chain, and others, which makes them transparent. Furthermore, users on a DEX have self-custody of their monies, as they transact using their own wallets and maintain custody of their digital assets.
‘Keys’ security
A crypto wallet maintains the private keys that allow a user to transmit and receive cryptocurrencies such as Bitcoin and Ethereum. It’s worth noting that your coins are kept on the blockchain, and you’ll need your private key to authorise transfers to another person’s wallet.
The security of wallets is determined by how they are managed by the user. The most serious threat to bitcoin security is the loss of the private key by an individual user.
Online wallets are the simplest to set up and use, but they are also the most vulnerable to hacking. Using an offline wallet rather than an online wallet is one approach to keep your bitcoin safe.
Offline wallets, whether paper or hardware, may be accessed via your computer, mobile device, or specially built hardware. If you do utilise an offline wallet, make sure you set additional layers of verification before accessing your cryptocurrency holdings.
Decentralised exchanges, in contrast to centralised exchanges, do not offer a user-friendly experience and are rather difficult to manage. It’s also because, with decentralised exchanges, consumers must first link to their crypto wallets, which is a time-consuming process. While the bulk of transactions take place on centralised cryptocurrency exchanges, decentralised exchanges are the best in terms of avoiding market manipulation and reducing the danger of hacking.
Offline wallets, whether paper or hardware, may be accessed via your computer, mobile device, or specially built hardware. If you do utilise an offline wallet, make sure you set additional layers of verification before accessing your cryptocurrency holdings.
Decentralised exchanges, in contrast to centralised exchanges, do not offer a user-friendly experience and are rather difficult to manage. It’s also because, with decentralised exchanges, consumers must first link to their crypto wallets, which is a time-consuming process. While the bulk of transactions take place on centralised cryptocurrency exchanges, decentralised exchanges are the best in terms of avoiding market manipulation and reducing the danger of hacking.
Disclaimer: Cryptocurrency is an uncontrolled market with no government backing. Cryptocurrency investing entails market risks. This post does not purport to offer any financial advice for trading or purchasing cryptocurrencies.
