If Coinbase goes Bankrupt, Bitcoin and other cryptocurrency holders could lose everything. Really.
Oh, what is Coinbase? They are the largest cryptocurrency exchange in the United States.
Oh, and what is cryptocurrency? Crypto, for short, is a digital currency designed to work as a medium of exchange through a computer network, not reliant on any central authority, such as a government or bank to maintain it. Bitcoin, Ethereum, and Dogecoin are three of the biggest crypto virtual money exchanges.
The only problem is that if the largest crypto exchange goes bankrupt, user funds could get wiped out. That’s according to a Fortune Magazine article citing the most recent Coinbase earnings report indicating that its holdings of $256 billion in fiat and cryptocurrencies “could be subject to bankruptcy proceedings.” Coinbase shares fell 15.6% in after-hours trading after the exchange released its earnings.
This came as a shock to millions of Coinbase customers who believed cryptocurrency is immutable and absolute and out of reach of the government and courts. Unfortunately, when holders of crypto choose to put their money in a digital wallet with a middleman such as Coinbase, it becomes a Coinbase asset. But there is a simple fix to this dilemma, and our Crypto expert Josh Wade is here with us to tell us about this fix.
Q&A:
- Welcome Josh, with a quarter trillion dollars’ worth of crypto and fiat money being held by Coinbase, how can we safely move that digital money out of Coinbase and into something safe?
Answer: Just move it from a Coinbase wallet into a private wallet. It’s that simple.
- Coinbase is down 80% from their Nasdaq debut in 2021. If it’s so risky to keep digital money in a Coinbase wallet and it’s that easy to move it out, why is anyone leaving their hard-earned savings in Coinbase?
Answer: Ignorance. Pure ignorance. Crypto is new and at the beginning, there were only private wallets, but that requires a digital funds holder to either memorize a long string of letters, numbers or characters, write it down on a piece of paper, and put it in a safe place or literally in a safe. For without that string of numbers and letters, you cannot retrieve your money. It’s gone forever. Instead, some people trust a middleman more than their own memories with their private key, thinking it’s safer. In terms of safety, a little-known fact is that there are already millions of dollars that were transferred to CoinBase in “wrapped Ethereum” that Coinbase refuses to help recover because they do not support wrapped Ethereum. I wouldn’t expect them to care about their retail customers and they still have not updated their terms and conditions to keep their retail customers safe.
- Is a private key a literal key like a safety deposit box key?
Answer: No. A key, or a seed phrase, is a sequence of random words. But without those words, your money is inaccessible. No one can get it back to you. That’s part of the double-edged sword of cryptocurrency. It’s safe. Only a person who has the digital key can get it. But it’s so safe, that without that key, it’s gone forever.
- Why can’t people just type in their key and keep it safe on their computers?
Answer: Hackers are always on the lookout for these keys, which are strings of characters. Once they hack your computer, they have your money. It’s not like a bank account; they are guaranteed up to $250,000. Knowing there is no government guarantee of your cryptocurrency, and that exchanges are subject to bankruptcy and asset seizure, one potential Safehaven is to transfer your crypto into a non-custodial wallet. This means the wallet will come with a 12-word phrase that you should write down and keep in a safe, or somewhere you’ll never lose it because it is the key to your wallet. There are many options to choose from including software and even hard drives to secure your assets. I use a ledger hard drive to hold my assets, it is the absolute safest option. But do not use anything online that can be hacked. Stay unplugged.
- Also, according to an article this week in Fortune Magazine, cryptocurrencies are collapsing, and the magazine posted a chart showing how much an investment of $1,000 made six months ago would be worth today
Answer: Yes, if you bought Bitcoin, Ethereum or virtually any other major cryptocurrency last fall, you would have lost about half your investment. But some people would argue that those cryptos are now bargains, just as a stock that drops in price might be a bargain.
- You are a co-founder of Aeropups, a Non-Fungible Token company, or NFT for short. What are NFTs and how do they differ from straight cryptocurrency?
Answer: NFTs are a new blockchain application that may soon eclipse Crypto. NFT stands for Non-fungible token; it’s a token that verifies your ownership of a digital asset, such as digital artwork. The difference between a non-fungible token, and a fungible token, like the US Dollar and Bitcoin, is that each NFT is unique and doesn’t have a direct exchange rate. For example, one project, BAYC, the most expensive collection to date, is a club you could have joined for about $300 a year ago. Now, those same tokens are worth around $400,000 at the cheapest. For this specific NFT project, there is a picture of a cartoon ape you would own that represents your token and verifies that you are part of the club.
- Are NFTs a scam?
Answer: Fundamentally, no. NFTs are a technology, and much like with phishing emails and spam calls, there are always people who may use technology to attempt to scam you. There are possibly some NFT projects that will build a following and not deliver on any of their promises to make money, frequently with total anonymity. However, if you do your research and learn how to keep your digital wallet safe, you can stay ahead of the scammers. As with any technology, there will be people that make it worse for the rest of us, but like any other technology, we’ll adapt and make it better and safer over time.
- How do you choose what NFTs to buy?
Answer: Good question. A rule of thumb is if you like an NFT, other people may also. It would be best to research the NFT founders and their project roadmap as much research as possible. If both sound like something you want to be a part of, you may want to go for it. If your gut says something is off, don’t buy it. People get into trouble when their only goal is to make money; you should like or love what you collect and their projects. It’s a bit like artwork. A black velvet painting of Elvis might sell at the side of the road for $10. But a Picasso might go for $100 million. The paint on canvas or velvet have the same raw materials value, but the intrinsic value of the Picasso is greater. NFTs offer artwork or something of value, compared to regular Crypto.
- Can anybody make money in NFTs?
Answer: Of course, but that’s not to say it’s without risk. Someone else will have to value an NFT you own more than its current value and want to purchase it for you to profit. The project team is responsible for driving value to the holders, or there is a risk of the value dropping, perhaps even to $0. One way of putting it is to buy the rumor and sell the news. You’re buying into the founders’ vision and hoping it comes to fruition with the world, seeing what you saw before it came to life.
- What is the Metaverse, how does it relate to NFTs, and why does it matter?
Answer: The Metaverse is just a term for a digital world like a video game. Many companies are working on Metaverses like Meta, NFTWorld, and Decentraland. So, it’s not just one big Metaverse but companies making them in their way. Concerning NFTs, Metaverses use them almost exclusively for plots of land and assets in the Metaverse. However, not all NFTs are part of a Metaverse. Most are collectible projects, like Disney’s golden moments, or business launches such as Vee Friends from Gary Vee. The largest Metaverse to date, Otherside by Yuga Labs, is being released soon. Imagine a video game like Minecraft where you build your world. It’s similar to that but imagine actually owning the land and the resources on your land. In a game like Minecraft, you could rule the world, log off, and have nothing. When 15-year-olds figure out how to make $50 a day on their own time in the Metaverse, they’ll have built something valuable for people who want to pay for it, perhaps, in three years. The Metaverse matters right now so much because it’s still early, and the world has no idea what’s coming. That’s opportunity.
- Tell us about the upcoming VeeCon conference featuring Snoop Dogg and Charlie D’Amelio.
Answer: The conference is scheduled from May 19 until May 22. VeeCon 2022 is a multi-day superconference where only VeeCon NFT ticket holders will experience an extraordinary lineup of content, including iconic keynote speeches; innovative and educational talks, panels, Q&A sessions; and many collaborative experiences. - Where can people get in touch with you?
Answer: AeroPups.com, where our social media is listed and linked. We’re also happy to chat with anyone on our discord server and Twitter.
About Josh Wade
Josh Wade is a co-founder of AeroPups, a Non-Fungible Token (NFT) project. An avid private pilot with a passion for aviation, Josh has been around aircraft since age 12, soloed on his 16th birthday, and received his pilot’s license at age 18. Josh fits the definition of an entrepreneur, having run a successful pressure washing business as a teenager and working his way through the ranks at various tech companies in his early 20s. In the NFT space, Josh is a holder of VeeFriend, a popular NFT launched by Gary Vee, Yuga Labs Otherside, and various other projects. With the drive to go further, Josh is working on launching a non-profit to help young adults learn how to fly, just as he did.
