What steps can investors take to protect their assets in the event of a collapse like FTX's and its impact on BlockFi?

5 answers

• Dec 24, 2021 · 3 years ago
  As an investor, it's crucial to diversify your digital asset portfolio. Don't put all your eggs in one basket. Spread your investments across multiple cryptocurrencies and exchanges to minimize the risk of losing everything in the event of a collapse. Additionally, consider storing a portion of your assets in cold wallets or hardware wallets, which offer enhanced security compared to online wallets. Regularly review the security measures of the exchanges you use and choose reputable platforms with a strong track record of security. Stay informed about the latest news and developments in the cryptocurrency industry to make informed investment decisions.
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• Dec 24, 2021 · 3 years ago
  Investors should always conduct thorough research before investing in any cryptocurrency or exchange. Look for information about the team behind the project, the technology they use, and their track record. Check if the exchange has proper security measures in place, such as two-factor authentication and cold storage for funds. It's also important to keep an eye on the regulatory environment and any potential risks associated with the exchange or cryptocurrency you're considering. By staying informed and making educated decisions, you can better protect your assets.
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• Dec 24, 2021 · 3 years ago
  In the event of a collapse similar to what happened with FTX, it's essential to have a backup plan. Consider using decentralized exchanges (DEXs) or decentralized finance (DeFi) platforms like BYDFi, which operate on blockchain technology and offer greater resilience against centralized exchange failures. DEXs allow users to trade directly from their wallets, eliminating the need to trust a centralized entity. However, it's important to note that DEXs may have lower liquidity and fewer trading options compared to centralized exchanges. So, it's crucial to weigh the pros and cons before making a decision.
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• Dec 24, 2021 · 3 years ago
  Investors can protect their assets by practicing good security hygiene. This includes using strong, unique passwords for each exchange account, enabling two-factor authentication, and regularly updating software and firmware on devices used for cryptocurrency transactions. It's also recommended to enable withdrawal whitelisting, which adds an extra layer of security by allowing withdrawals only to pre-approved addresses. By following these best practices, investors can significantly reduce the risk of losing their assets in the event of a collapse or security breach.
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• Dec 24, 2021 · 3 years ago
  One way to protect your assets is to consider using insured custodial services. Some exchanges offer insurance coverage for digital assets held on their platform, providing an additional layer of protection in the event of a collapse or hack. However, it's important to carefully review the terms and conditions of the insurance policy to understand the coverage limits and exclusions. Additionally, keep in mind that insurance coverage may come with additional fees or requirements. It's always a good idea to consult with a financial advisor or do thorough research before opting for an insured custodial service.
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