DeFi or cry: why self-custody is the better option for your crypto
With the FTX contagion reaching critical levels and still spreading , it’s time we take a look at the enormous advantages of DeFi — and why you should move your coins away from centralized vaults and into non-custodial wallets.
CeFi vs DeFi — the scales tip more and more
Below we’ll explore why CeFi cannot hold its ground against DeFi, especially in terms of security. This has become more obvious in the last months. Let’s begin with a key point.
Do you own your wallet?
No. The centralized institution that hosts your wallet has access to your password, KYC data, and private keys, providing it with the power to do whatever it pleases with your wallet at any time.
Yes. Your wallet information is stored on your device. Changex cannot by any means access your wallet or prevent you from using it however you see fit. KYC data will be limited exclusively to Changex banking, which has no direct relation to your crypto wallet, therefore everything is entirely in your hands.
Do you own your crypto?
No. The CEX has control over your wallet, therefore control over your crypto in its entirety. A centrally-issued wallet is “loaned” to you, but not sold to you — you “rent” it, but the landlord is still the centralized entity, and you know how that goes. The landlord can choose to alter your apartment as he likes, say remove furniture (read coins), or decide to change the locks, while keeping your deposit money just because. If you get locked out — well, it is what it is. Your crypto is inaccessible, support is infamously unresponsive, and you are in the dark. There is zero you can do except wait. And maybe pray?
✔️ DeFi ️️
Yes️. Changex cannot access your wallet. We have never, and never will, lay eyes on your seed phrase. We have no access to your pin code, private keys, assets, or any data related to your wallet. Essentially, we have access to nothing — your crypto is your own, and you choose what to do with it. We can never lock you out of your wallet, and we can never access your funds in any way. This is a blockchain fact.
Can you access your funds 24/7 without limitations?
Yes, but actually no. This has happened a million times for various reasons — to “prevent volatility”, in order to “ensure stability”, or to “assess impact” of an on-going event. Centralized entities have frozen funds, suspended withdrawals, or locked users out of their wallets, limiting access to their own money.
✔️ DeFi ️️
Simply yes. The decentralized nature of wallets means that you are the sole owner and manager of your funds. We couldn’t lock you out of your wallet if we wanted to, and we don’t — that’s why Changex is 100% non-custodial.
Is there anything you can do to prevent the loss of funds in case your wallet, or the company behind it, fails?
No. Because the wallet and funds therein are technically not yours to begin with. You could hope for a bailout or some sort of plan by the failed company to reimburse you in case your money is lost, but these types of schemes have been hit and miss.
✔️ DeFi ️️
️Yes. All assets live on the blockchain and, even in the worst-case scenario for Changex, your coins will still be there and accessible via other means — nothing is ever lost on the blockchain.
Can you prevent how your funds are managed, possibly used without your knowledge?
No. “Secretly insolvent” is a phrase that comes to mind — your money has been used in the past to fund questionable ventures, or could have outright been used in illegal actions, and are now gone with zero backing. If CeFi decides to use your money without asking for your consent beforehand, there is simply nothing you can do about it.
✔️ DeFi ️️
️Yes. There is nothing we can do with your funds — we simply can’t access them.
How do you know you won’t be hacked?
You don’t. Even if you are not the target of a hacker, and it is unlikely you will be, single points of failure mean that one breach burns everyone. If a centralized platform is attacked, all it takes is for one successful attempt to affect the investments and holdings of countless users, due to the centralization of data — one server, one weak point in a link that many people depend on. Social engineering is another thing to consider as well — hackers can’t really convince a smart contract that they will make it rich, so if they could kindly share their private keys, right?
✔️ DeFi ️️
️You know. The chance that a non-custodial wallet is breached and hacked is exponentially lower than when it comes to a centralized, or custodial, wallet. HydraChain was built with security in mind and is especially prepared for attempted 51% attacks — it is nearly impossible that such an attack succeeds.
As long as you take good care of your private keys and take basic precautions, your wallet is a pocket-sized Fort Knox. Digital hygiene and foresight are a must. Use this as general advice:
- Never, EVER reveal your 12- or 24-word seed phrase to anyone, ever, not even if he’s the one and true Santa Claus. Santa doesn’t need your seed phrase. Only you do. Keep it safe.
- Pay close attention to links you click on — most scams and phishing links give themselves away right from the get go, so make sure to check everything. Is that capital O (oh) looking funny? Maybe it’s a 0 (zero). Maybe it’s in Cyrillic. Does the website have a valid security certificate? Are there typos, examples of bad grammar or punctuation? These are all red flags — stay alert.
- If anyone offers to double, triple, or quadruple the amount of crypto you have in a day, week, or month, but before that you have to send them some coins — it’s always a scam. If someone needs your private keys to “sync your wallet” or help you “with migration” or an “airdrop” — it’s a scam. If you have a technical problem and you post about it on Twitter — no one who has your good intentions in mind will ever message you first. There are official support channels where help can be requested, but help is generally never offered beforehand (via unofficial or public channels that is). If someone takes the first step in order to fix your problem — 100% scam. Delete the chat, block them, report them.
- When using Google to access websites that interest you — never click on the sponsored posts that appear on the top of the search results page. Scroll down a bit and click on the official link to the website you want to access.
- When logging into your wallets on a desktop computer — use a combination of physical and virtual keyboard to input your password in chunks: this prevents keyloggers from mapping out your keystrokes. Example: enter the first 3 characters with your physical keyboard, then switch for the next 5 to virtual, and so on. Switch up the pattern every time. Limit yourself from using actual words in your passwords — random combinations of letters, numbers, and special characters are always better. Also, keep it long — 30+ characters might seem excessive and an inconvenience to enter every time, but it’s the better choice.
- And, of course, use a good anti-malware and anti-virus program. As a rule of thumb, always run a scan before accessing your wallets.
Now to the last point — one that makes DeFi truly groundbreaking in how it handles transactions between two parties.
Trust can be problematic. Is it a part of the equation?
Yes. Centralized institutions are run by people. People make mistakes. People can be influenced or swayed. If fear of punishment is the only thing that keeps the people that manage your money on the right track, then your funds are not safe.
✔️ DeFi ️️
️No. DeFi runs on code. Code has no intentions, it has no wishes, nor ulterior motives. Code cannot decide to gamble or expose you to bad investments. The code has no mind of its own — it can only do what you tell it.
Changex is exponentially safer
✔️ 100% decentralized
Changex has no control over your wallet or funds therein. We cannot access, freeze, or limit you in how you use your coins.
✔️ 100% self-custody
️Changex has no access to your password and your seed phrase / private keys. This information is kept securely on your device in an encrypted form and further secured by Apple Keychain Access for iOS devices and Android Secure Store for Android devices.
✔️ 100% code
We cannot, do not, and will never get to decide how funds are managed, if you have access to your wallet, and what you do with your money. Everything is 100% smart contract based and you are the only one in command. Period.
✔️ Infinitely more secure
️The chance to get hacked on the blockchain is exponentially lower when compared to centralized wallets.
✔️ Smart and always learning
DeFi bridges have been a known weakness for decentralized exchanges, but the Hydra-Ethereum bridge is just built differently. Read more about its security mechanisms here.
So there you have it.
DeFi or CeFi? Our compass points to DeFi and always will. We hope you found this article useful.
Thanks for reading,
The Changex team