2023 Crypto Beginner Guide :Are Central Exchanges Public

26 Jan 2023

Let 2023 be the year you get into the fascinating space of Blockchain and let me be your guide. In this blog, we are going to give you the big-picture perspective of where the technology is today after the FTX scandal. This series will give you context to start learning about crypto and build you up one step at a time.

Buckle up for a fantastic journey full of brain twists and adventure.

Ready, Set, Go!

Today, we will be covering 3 main ideas:

Security tips on how to go forward after central exchanges lost trust

Crypto Wallets: Hot versus Cold


The current status of world adoption of Blockchain Technology

US Regulation and why it is important

Let’s dig in, shall we?

FTX Aftermath

Proof of reserves was made famous after the FTX situation. However, it has been in the industry for a long time. An exchange in the US called Kraken has been doing proof of reserves for many years before anyone else started doing it.
So what does proof of reserves really mean? it means that you can cryptographically verify if the funds, that the exchange has, are enough to cover all the deposits that customers have made. However, it does not say anything about the liabilities of this institution. Hence, the data is not complete even when you do proof of reserves as it is not the full picture.

Rule of thumb

when it comes to centralized exchanges in general: They're only for people to deposit their money, swap to the token of choice, and then return funds to their wallet. Central exchanges can be thought of as public toilets; go ahead and do your business and then get out.What about Binance? Just follow the rule and do not keep your funds on any exchange. Irrespective of what happens to Binance, it is not recommended to put crypto on an exchange and you should have it in your cold wallet. Some crypto can be in your hot wallet as well. But if you wanna store it, have a cold wallet.

Wait, What is the difference between a hot wallet and a cold wallet?

In simple words, what is a crypto wallet? It is a way for you to have your own account on the blockchain. This wallet can be accessed through a digital key.

Status of World Adoption

What we see in disruptive technological innovations, in general, is that the first country to adopt it will rise in power. We saw that in the past when the power went to those who adopted the steam engine, the printing press, and the electricity telephones first. Many of those countries were in the west so we see the west is on top of the world (for now).

It's a proven fact that when new technology is out, there is a race to adopt it. If you're the first then you have a big lead in the market which will lead to geopolitical changes in the world. However, it's difficult to be first because there is a lot of uncertainty as the new technology disrupts existing power structures, especially in the case of blockchain.

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