People Need Safer Crypto Trading, Vitalik Buterin Advises CEX Use Cryptography

Vitalik Buterin recommends crypto traders use cryptography. (Photo; Doc. The Coin Republic)

JAKARTA Vitalik Buterin, as the founder of Ethereum recently discussed the importance of security for crypto-centred trading companies (CEX) or exchangers. To that end, one option that can be used is to enter cryptography.

For your information, cryptography is an information and communication security technique through the use of codes so that only people intended for that information can understand and process it. Thus prevent unauthorized access to information, reported by Geeks for Geeks.

The bankruptcy case of the FTX crypto exchange has prompted various global crypto trading companies and industry players to provide a safer system. Vitalik Buterin noted that with cryptography, crypto exchanges could be safer. He also explained that the central crypto exchange (CEX) with decentralized crypto exchanges (DEX) will continue to exist and continue to go hand in hand.

As is well known, FTX is a centralized crypto trading platform (CEX) where user funds and data are under company control. The collapse of FTX reduces investor confidence in CEX and they switch to decentralized exchanges such as Uniswap and Pancakeswap. Users also select MetaMask and TrustWallet digital crypto wallets to store their crypto coins instead of stored on CEX.

After FTX was rocked by the liquidity crisis, crypto lending company BlockFi was also affected, deciding to stop withdrawing platform users' funds. This condition prompted investors to transfer their cryptocurrencies off the exchange. According to data from CryptoQuant, as many as 742,401 Bitcoin left the exchange last week.

In addition to the increasing use of crypto digital wallets, users of Ledger's physical crypto store have also experienced a significant increase. According to DappRadar, crypto users are advised to store their digital assets outside of exchanges or exchanges.

Increasing consumer concerns about the security of asset storage on the centralized crypto exchange (CEX) triggers Buterin to emphasize the importance of cryptography so that CEX is trustworthy. Basically, Buterin recommends using cryptographic evidence to show that there are enough funds at all times at a time to cover any obligations to platform users.

The ideal long-term solution is to rely on self-custody, coupled with technologies such as multisig and social recovery wallets to help users deal with emergency situations, Vitalik Buterin said.