Friday, December 3

Binance says “no withdrawals” and people fear for their bitcoins

Money and centralization: a bad combination. History has shown us in the most painful way, with countless scams, with banks blocking the savings of a lifetime of entire families, with governments erasing by decree the right of everyone to manage their money as they see fit.

And on the morning of Monday, November 1, there was a scare and reminder emerged in the world of cryptocurrencies, with Binance as the protagonist: “we have temporarily disabled withdrawals,” read the message from the largest exchange in the world that set off all the alarms.

The paradox that a message like this can generate fear is that bitcoin came, among other things, to eliminate dependence on trusted third parties, on mediators between you and your money: instances like a bank or, in this case, like Binance.

The problem is that, although exchange platforms like that are necessary for the movement of the market as we know it, there are many people who keep their entire balances in these stores. They use them as their “bank” for bitcoin and cryptocurrencies, not as the transit point for other operations, be they speculation, peer-to-peer exchange, or fiat money.

Binance is not just an exchange platform. It is the largest bitcoin and cryptocurrency exchange in the market and has more than 500,000 BTC in its reserves (approximately 20% of all bitcoins on exchanges today). According to Glassnode records, Binance tiene more than $ 32 billion in BTC alone.

The figure is alarming only in BTC, although there are dozens of cryptocurrencies that users can have deposited on this platform. Hence, a suspension of withdrawals (which also ended and returned in a short time during the day) generates so much discomfort.

Binance holds more than $ 32 billion worth of BTC. Source: Glassnode.

Self-custody is the key, the reason for bitcoin

It is curious. But just a day before, the 13th anniversary of the publication of the White paper (or white paper) of Bitcoin. Among many things, Satoshi Nakamoto postulated the proposal of a monetary system that would eliminate the figure of the intermediary, which would allow everyone to be sovereign over their money.

And now, more than a decade later, thousands of people have their bitcoins on platforms that, if their owners so decided, could run away with their money at any time they prefer. Yes, they can stand up to law enforcement if they do so, but we’ve seen scams like this go unanswered in a sadly common way.

It sounds trite and even unnecessary among bitcoiners and connoisseurs of the world of cryptocurrencies to have to say it. But: if you do not control your private keys, your BTC or any other cryptocurrency is not really your property. The balance that you see on the desk of your preferred custody center is nothing more than a voucher in front of a bank.

To use or not to use Binance? That is the question

Neither I nor anyone else are the one to tell others what to do or what not to do with their money. But after a few years of writing and researching on these topics, I could make some recommendations, based on my own experience.

Do I use Binance? Yes. As long as it serves me specific purposes, I see no major problem with doing so. But I would never let my economy depend entirely on this or any other platform. If I did, my money would be one click, fraud, or even hack away from being lost forever.

It is really advisable not to maintain a balance on this type of platform, however reliable they may seem, unless you commonly use them for exchanges, trading or any of their services. And always keeping only part of your balance, not your life savings. Keeping these exchanges as “banks” leaves you at their mercy.

If your idea is to save or keep cryptocurrencies in the long term, it is best to use your own wallets, which are really under your control. Options for this there are hundreds, either from apps or hardware wallets. There are even exchanges that do not guard your coins, for greater security.

Yesterday it was just over two hours. What if at another time the problem lasts for days, weeks? How then is using bitcoin different from having bolivars in the Banco de Venezuela or pesos in any Argentine bank when the last one occurred financial playpen at the beginning of the 21st century, if you are depending on a third party to manage your money?

Disclaimer: The views and opinions expressed in this article belong to its author and do not necessarily reflect those of CriptoNoticias.