In order to promote the ideals of decentralization and self-custody of assets, it has created a CEX Education Program that’s giving away five percent of the VERSE token supply to users who’re unable to access their holdings in FTX, BlockFi, Celsius, Voyager and other platforms that have gone bust.
VERSE is the native utility token of the Bitcoin.com wallet ecosystem that symbolizes its commitment to a multichain world of decentralized finance. To claim a reward in VERSE, users of the above platforms simply have to sign up at getverse.com. The rewards will be paid out next month when VERSE officially launches.
Bitcoin.com stressed that the program is not a one-off thing, but will continue to assist victims of other exchange collapses in future, while providing an incentive for users to switch to self-custodial products.
The collapse of FTX, which was the world’s second-largest crytpocurrecny exchange in terms of traded volume, has shown the spotlight on the dangers posed by centralization in the crypto ecosystem. It’s still not clear exactly what went wrong at FTX, but whatever went wrong was only possible because of its custodial nature. With FTX, users entrusted their funds to the company, which held the private keys to their wallets. As such, the funds in each user’s wallets were not actually theirs per se, rather, they had to rely on the goodwill of FTX each time they made a withdrawal. While FTX always kept up its end of the bargain until recently, it could no longer do so when faced with a “liquidity crisis” that sparked a race among users to withdraw their assets.
FTX has since declared bankruptcy, with the latest reports saying that it owes its biggest creditors more than $3.1 billion. There have been allegations that FTX’s management mishandled user’s funds, making very dodgy investments and, essentially, frittering their money away.
FTX’s management could only do this because of the exchange’s centralized structure. It meant that all of its accounts and finances were hidden from the prying eyes of users.
Bitcoin.com Chief Executive Dennis Jarvis spelled out the dangers of centralized finance, saying that such platforms have a strong appeal with their slick UIs, logos and advertising deals, endorsements from celebrities and so on. “As we’ve seen, lack of transparency in the centralized model, be it in crypto or tradfi, is an enabler for the gross mismanagement of customer funds and, in some cases, blatant fraud,” he said.
Jarvis explained that centralized platforms like FTX are really just masquerading as crypto firms, when in reality they operate a much more traditional business model that’s all about profit. To that end, he said they separate users from their coins, which is a practice that’s antithetical to the entire proposition of crypto.
“Bitcoin and decentralized finance are transformative precisely because they empower people to take custody of their assets while at the same time enforcing radical transparency in the underlying financial infrastructure,” Jarvis explained.
Bitcoin.com is launching its CEX Education Program to get that message across and incentivize users to transition away from risky centralized exchanges. It’s all about encouraging users to adopt self-custody of their assets - in other words, using a wallet that they hold the private keys to. This is the only way to enjoy the real benefits of crypto, Jarvis said.
It makes sense that Bitcoin.com is offering this, as it has always been one of the most vocal supporters of self-custody in the industry. That’s what its main product, the Bitcoin.com Wallet, is all about. With it, users manage their private keys themselves, meaning they remain in full control of their funds and never put them at risk of being misused.
It’s a message that has already resonated with many in the crypto space. To date, more than 35 million Bitcoin.com wallets have been created across its five supported blockchains, including Ethereum, Avalanche, Polygon and Bitcoin itself. Bitcoin.com is also committed to the wider DeFi ecosystem with its VERSE token, which gives participants a way to earn rewards while buying, selling, storing and using their crypto tokens.
In a statement, Bitcoin.com said the implosion of FTX has strengthened its resolve to help crypto users obtain the economic freedom that crypto is all about.
Jarvis decried the incident, not only because of the millions of users who have suffered losses, but also because of the damage it has done to the reputation of crypto itself.
“It’s a black eye for the whole industry,” he said. “Many who got burned will leave, and many more still on the sidelines will view it as a reason to stay away – and that’s a real shame because decentralized finance is a force for good. Bitcoin.com has decided to do something about this situation that will extend some sort of recompense, promote the foundational tenets of self-custody and DeFi, and help build back this industry stronger than ever.”