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Blockchain For Your Digital Assets Safety

The crypto industry has recently experienced instability and significant events, such as the collapse of an algorithmic stablecoin, a protocol, and one of the largest exchanges. In addition, the failure of a leading crypto exchange FTX also negatively impacted user sentiments. Unfortunately, this has also provided traditional finance supporters with another opportunity to claim that the crypto industry is failing. However, it is important to note that FTX-like incidents happen due to mismanagement of user funds and the inability to run a fintech business with impeccable SOPs and good corporate governance. It is not the failure of the blockchain industry or decentralized finance but a result of an unregulated centralized exchange mismanaging customer assets, an instance that is beyond imagination.

The blockchain is a distributed database that allows secure, transparent and tamper-proof storage of digital assets. By using cryptographic hashes, each asset can be securely stored on the blockchain and tracked as it changes hands. This makes it an ideal platform for keeping track of digital assets. In addition, blockchain allows the creation of smart contracts, which can automate the management of digital assets, ultimately increasing the overall security.

While talking about blockchain security, it is also essential to look at its vulnerabilities. A user must understand the type of blockchain they are interacting with, whether it is public, private, or permissioned, and then choose a medium to store their assets accordingly. Because managing your digital assets is probably one of the most important aspects of owning a digital asset. The most commonly used ways to store digital assets safely are via blockchain-based wallet apps, custodial and non-custodial.

An individual operates a wallet only by a secret private key; therefore, the wallet is safe until that private key is not made known. The wallets are of multiple kinds. A cold wallet keeps your data offline as it is not linked to a live network. In contrast, a hot wallet is connected through the internet with service providers for debit and credit. It is generally connected with CeFi exchanges or custodians, or DeFi platforms. One can create multiple wallets. One can keep digital assets safe by keeping most of the holdings in a cold wallet and some in a hot wallet for transfers.

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