The day the last withdrawal is locked
Imagine the feeling (maybe you’ve experienced this before): you’re a regular person, somewhat familiar with cryptocurrency. You’ve heard the phrase “Not your keys, not your crypto,” and sure, that makes sense for some of those sketchier exchanges, but this is Exchange Corp (let’s use this as a hypothetical example). Everybody trusts Exchange Corp. You saw their CEO on cable news the other day, and he sounded very trustworthy. In fact, he even said on his Twitter that your coins always belong to you, even when you hold them on Exchange Corp.
One day, you log onto Exchange Corp and try to withdraw just $50 worth of BTC to move somewhere else, when suddenly you see a strange error message:
“Due to market volatility, withdrawals have been limited.”
That’s odd, what does that even mean?
You log in to Twitter to see if anybody else is experiencing the same thing.
“Exchange Corp. just rugged!”
“RIP to everyone that just got rekt on Exchange Corp. I knew a sinking ship when I saw one.”
“@ExchangeCorpCEO can you help me please? Why can’t I withdraw my money??”
Does the above scenario sound familiar to you? If you’ve paid attention even the slightest amount this year, then chances are you’ve seen this story play out many times for countless cryptocurrency holders. People who didn’t know any better — or who truly thought they found a company that they could trust — woke up to the harsh reality that the crypto cliché of “not your keys, not your crypto” is, in fact, true.
Why does this keep happening? How do people keep getting taken advantage of? Is there a fundamental problem with cryptocurrency itself that horrible breaches of trust like this are able to happen?
To understand the answers to these questions, we first need
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