As 2022 comes to an end, we want to reflect on the lessons that members of the crypto community learned from an especially turbulent year. From all-time highs and lows to multiple major bankruptcies, there’s a lot to glean from the most notable happenings of 2022. Read through these five lessons and take them with you into the new year!
Not Your Keys, Not Your Coins
This old crypto adage proved its truth this year. It’s important to know that cryptocurrency exchanges hold the private keys to their customer’s crypto wallets, giving them control over customer’s funds. The exchange effectively owns the crypto until it’s moved off into a noncustodial wallet like the RockItCoin app. With many cryptocurrency exchanges like Voyager and FTX having gone bankrupt, it is increasingly important for people to move their crypto off exchange platforms and into noncustodial wallets. If you’re a current exchange user and want to move to a different service, consider using RockItCoin to purchase cryptocurrency.
How is RockItCoin different? At RockItCoin, we ensure that our customers truly own their crypto by requiring a personally owned wallet at the point of purchase. This way, the crypto is sent directly to the customer’s wallet – RockItCoin never stores customer funds. Read more in our past blog on this topic!
Market Correction vs Bear Market
When the cryptocurrency market value drops, people make predictions on how long the drop will last. In the case of 2022, the cryptocurrency market entered a bear market after a prolonged period of decreasing overall value.
The crypto community initially thought that the drop in prices was just a market correction, or when markets experience a short-term pullback as the price rises. However, as the months continued, people became discouraged as the global economy was influenced by wars and economic slowdowns. A common term to describe this is FUD, or Fear, Uncertainty, and Doubt. When the crypto community starts to feel those things, they start to sell, driving prices downward and leading to a domino effect. Some view the bear market more positively than others, as a healthy market will experience both bull and bear markets. Crypto is “on sale” for some, but “dead” to others, depending on their viewpoint.
Financial Stability of Crypto Institutions
While the crypto market continued its downward trend, multiple crypto lending institutions and centralized exchanges filed for bankruptcy. The most notable of them all is also the most recent, FTX. The exchange allegedly used customer funds to make risky investments in its sister company Alameda Research and put its own coin (FTT) on its balance sheets. As a result of a massive FTT sell-off, FTX was left needing $8 billion in emergency funding and filed for bankruptcy on November 11th, 2022. Read more about FTX’s bankruptcy here.
FTX wasn’t alone. BlockFi, Celsius, Voyager, and Three Arrows Capital are all notable companies that were crypto lenders, exchanges, and hedge funds that filed for bankruptcy this year. Exchanges are now scrambling to publish proof of reserves to earn the public’s trust, marking a major shift in the business-consumer relationship.
DYOR (Do Your Own Research)
The phrase “do your own research” has been said millions of times in the crypto world, especially to those early in their crypto journey. With rugpull schemes and untrustworthy exchanges, it’s imperative that you do research on anything in the crypto industry before putting your hard-earned money in it. If it’s a cryptocurrency, how long has it been around for? What is the technology behind it? What is its purpose? These are all good questions to ask when looking for a new crypto project to buy into.
Don’t forget to keep up with industry news! If you’d like a summary of the top crypto news stories delivered straight to your inbox every week, check out RockItCoin’s This Week in Crypto! It’s also available to read here on our blog page. If you’d like to read more crypto news, check out CoinTelegraph, CryptoSlate, Coindesk, and Decrypt.
HODL (Hold On for Dear Life)
If you bought crypto at any time this year, HODL! It’s been a rough year, but keep in mind what the long-term mission of cryptocurrency is. It’s not just about the price, it’s about the decentralized finance revolution that crypto brings. People can be their own banks, and securely transfer funds to each other without a third party. It might seem like the wild west at times, but remember that the industry is still very young!
We hope you’ve enjoyed reading about the top 5 lessons we learned from 2022. If you bought crypto this year and you haven’t sold yet, let us know on Twitter by using #rockitcoin!
