Every time there’s big news from crypto recently, it seems to be a hack or a bankruptcy. Crypto exchanges and platforms are going under and taking users with them, while hackers and regulators circle like vultures. All this gives the space a very, very bad look.
Guess what? It doesn’t have to be like that. There is a better way, and it’s not even some closely-guarded secret. There are people who have known about it for years and are now sitting back, chilling, watching the panic unfold. Others discovered it only after losing funds in one of the big exchange fiascos.
The time to protect your crypto holdings is NOT the day AFTER another centralized crypto exchange bites the dust. Whether you lost funds on FTX or not, the time is NOW to get your crypto secured.
Move your crypto to a NON-CUSTODIAL wallet
If you’re following the FTX news, things seem to be getting crazier with every headline. Remember, centralized crypto exchanges – like FTX, Binance, Coinbase, Robinhood, Kraken, or Gemini – are in many ways just like traditional banks and governments. They are run by regular humans who can make mistakes, hasty decisions, and then lie about it. Dumpster fires can and do happen.
The real problem is that when things start unraveling on a centralized custodial platform, you have no access to your funds and no control over what happens to your crypto. You can’t move it out and you can’t sell. It’s unilaterally held and managed by the platform – that’s what ‘custodial’ literally means. You are held hostage by the fate of the exchange, and like we witnessed with FTX, an exchange can go down no matter how big and secure it seems to be.
Non-custodial wallet companies like MEW can’t get hacked, go bankrupt, or run away with your funds. Why? Because we don’t have ANY access to your wallets and coins. We can’t take your crypto from your wallet, can’t loan it out to someone else, and can’t invest it in risky projects for our own benefit. We don’t control your funds – only YOU do. Even if MEW never produces a single line of code again and all our sites get shut down, you’ll be able to access your crypto in a different interface with your keys/recovery phrase.
If you are still holding funds on a centralized exchange, move them to a non-custodial wallet. Today.
1. First, create the non-custodial wallet.
Use either MEW wallet app or Enkrypt web3 browser extension, depending on whether you prefer to manage your crypto on your phone or PC. If most of your crypto is NOT Ethereum-based, then Enkrypt might be a better choice because it already supports multiple chains, with more being added all the time.
2. MAKE SURE YOU WRITE DOWN YOUR RECOVERY PHRASE AND KEEP IT SAFE.
This is the most important difference between centralized exchanges and a non-custodial wallet. Your recovery phrase is YOUR KEY to the wallet. You know the phrase - “not your keys, not your coins”? Well, now you have your keys and you own your coins, but it’s up to you to keep your keys safe.
Write the phrase down on paper, DON’T put it in a cloud-based doc or email, and DON’T keep it on your computer. Consider keeping multiple copies in multiple secure places and using a waterproof and fireproof storage container. And read our tips for avoiding scams and phishing.
3. Find your address in the new wallet.
All you need for sending your crypto to the new wallet is your public address. You will NEVER need to give anyone your recovery phrase to receive crypto. In fact, never give your phrase to anyone for any reason. It gives full, immediate access to your funds. When people lose crypto from non-custodial wallets, it’s always one of two things: because their phrase got stolen or because they gave it away themselves.
4. Send your crypto from your exchange.
The trickiest part of getting your crypto into a non-custodial wallet is making sure that you are only sending the type of crypto that’s supported by the new wallet. With MEW wallet app, that’s Ethereum and any Ethereum-based (ERC20) token. If you’re using Enkrypt browser wallet, you can send funds based on Ethereum and also on Polygon (MATIC), BNB, Polkadot, Optimism, and Ethereum Classic.
In your exchange app or website, find your Ethereum account. (Or the relevant account for other chains, if you’re sending to Enkrypt.) An Ethereum address should be starting with 0x and containing 40 letters and numbers (using only a-d and 1-6). Have your new MEW wallet or Enkrypt address handy. Make sure to copy/paste it instead of typing manually because even one character off in the address will send your funds to a completely different wallet!
Find the Send function in your exchange interface, and put your new wallet address in the field where the address you are sending to goes. You may want to first do one transaction with a small amount to make sure everything goes as expected.
Select the amount of crypto that you want to send. (Some tokens that can be stored separately from ETH on the exchange, but also could be compatible with Ethereum are DAI, USDC, and USDT). Once you confirm and send, your crypto should show up in your MEW wallet or Enkrypt extension within a few minutes, though this will depend on your exchange processing times.
Different non-custodial wallets for different purposes
There are many options for non-custodial storage – hardware wallets like Ledger and Trezor, mobile apps like MEW wallet, and browser extensions like Enkrypt. It’s probably easiest to start with a mobile wallet, but as you get more experienced, you will want to have a couple of wallets of different types. They can serve different purposes, and the old wisdom about not putting all your eggs in one basket also pertains.
Hardware wallets are for storing large amounts of crypto that you don’t anticipate moving any time soon. Some people store these wallet devices and/or the corresponding recovery phrases in bank vaults. The point is, this is your most secure and protected storage, and you should treat it accordingly. This is not the wallet for doing daily trades or participating in risky projects.
Browser wallets are for daily interactions with decentralized applications and web3. You want the opportunity to interact with exciting new DApps and DeFi, but you want to take only as much risk as you are prepared for. Even for experts, it’s hard to be 100% protected from scams that get you to interact with bad contracts and sign malicious operations, so you don’t want to be holding large amounts of crypto in browser wallets for long periods of time.
Mobile wallets are another great option for interacting with DApps and web3, with even greater convenience than using a browser wallet on your computer. Mobile wallet apps are the best for quick payments, daily trading, and keeping tabs on your DeFi positions and NFTs while you’re on the go. Apps like MEW wallet do a great job of protecting your keys in an encrypted enclave on your mobile device. In fact, they can often be more secure than a web wallet on a computer! As long as you have your phrase, you don’t even need to worry about losing or breaking your phone. You can always restore your wallet on a new device.
When to use centralized platforms
There are decentralization and privacy maximalists who will tell you that you should never, ever go centralized. However, in the current crypto landscape, that’s not always feasible. Onboarding (aka buying crypto using your card or bank account) and selling crypto will have to happen through centralized services, as well as some crypto swaps that are not supported by decentralized exchanges.
That’s fine. You can keep your exchange account and use it when you need to buy crypto, sell crypto, or make a swap that you can’t do with your non-custodial wallet. Only send the amount of crypto that you want to trade to the exchange, and send back to your non-custodial wallet when you’re done. A centralized exchange SHOULD NOT BE YOUR WALLET for holding funds. It’s just a tool to accomplish some of your crypto goals – one of the many tools you’ll be using in your crypto journey.
Let us help you
We realize that many crypto users, especially newbies, find self-custody challenging because that’s not what they are used to in traditional internet and banking services. We are here to help you, because we believe that self-custody is worth it to keep your crypto safe. Reach out to firstname.lastname@example.org, explore our Help Center, join our community on Reddit, or send us a DM on Twitter. Let’s make crypto safer for everyone, together.