We can say that the year 2022 is a year full of twists and turns in the cryptosphere. If some made money, many got REKT. They lost because of bad investments, scams, CEX (centralized exchanges) failures or even all of the above. The FTX disaster that follows many others is perhaps an opportunity to remember the basics to no longer “get REKT. »
We can already start with a little reminder about the origin of the word REKT.
Origin and Meaning of REKT
REKT (or rekt) is derived from the English word “wrecked”. It is a slang term to define something or someone who is ruined, ransacked, annihilated. The origin could be the use of this word by a user, Balrogboogie, on a World of Warcraft forum in 2012.
Originally used in gaming, REKT is perfectly suited to the ruthless world of trading: every trader will experience REKT at least once in their career. To become REKT is therefore to lose everything quite brutally, even very brutally. Bad trade (with catastrophic leverage effects), exit scam, sudden bankruptcy of an exchange, many individuals have lost colossal sums this year on the crypto market. The summer was punctuated with disasters and the nightmare culminated with the bankruptcy of FTX, which until recently was the second crypto exchange after Binance.
You can get REKT without trading!
The promise of easy gains in bull market phases attracts many retail investors. Getting started more or less well on the internet, they embark on the adventure with full of hope (and sometimes a little too much greed) and are easy prey for scammers. Perhaps out of comfort, these new investors leave their funds on exchanges or entrust them to more or less honest people.
And this is where the real problem lies: bitcoin (BTC) was born during the subprime crisis, which culminated in the bankruptcy of the bank. Lehman Brothers and the discovery of Bernard Madoff’s gigantic Ponzi scheme. Bitcoin was born to no longer need a banking intermediary or other so-called “trusted” third party. Bitcoin was born so that citizens could carry out transactions between themselves, Peer-to-peer transactions.
“Not your keys, not your bitcoins”
Sometimes we learn in pain. As soon as bitcoins and cryptos are on a centralized exchange, they do not belong to their owner who does not have the private keys of their cryptocurrencies. This is so that if the exchange shuts down or is hacked, there is nothing more users can do to recover their funds. In any case, it will take time and the result will remain uncertain. It is therefore essential to have a hardware wallet like Bitbox, Ledger or Trezor (there are many others elsewhere). When you are not an informed trader, it is more reasonable to invest regularly (DCA) and to have your private keys. In any case, do not place all your funds on a single exchange.
If troubled banks get state support (with citizens’ taxes) most of the time (Too big too fail, meaning that if a big bank were to fail, it would destabilize the whole system and therefore need to be bailed out its coffers), it is not the same with cryptocurrency exchanges. There is therefore almost no guarantee of getting your hands back on your funds in the event of bankruptcy. And no exchange is immune as the terrible story of FTX clearly shows. This will give further food for thought to critics of bitcoin and cryptocurrencies and new reasons for lawmakers to tighten controls. Yet the problem is not bitcoin (BTC), the problem comes from trusted third parties: mismanagement, hacking, corruption and greed. It’s time to manage your funds yourself, which is why bitcoin was born.
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