The Step-by-Step Guide to Leaving Centralized Exchanges Behind
Take Back Control of your finances
Even tho you haven’t been affected by the FTX, MT GOX, or any other centralized exchanges hack, it has never been a good idea to store your crypto into those platforms as you are losing total control over your assets and giving them to a third party.
Most of the time, regulations in the crypto world are not here to protect you but to restrict your freedom. The free crypto market does not need regulations because it is already regulating itself with open-source and immutable code to protect users; it will never save you from scammers and will only remove freedom, but in order not to get regulated, you need to take control over your personal finance and before doing that it is essential to educate yourself on private key management and know what you sign.
And to be clear, I still use Coinbase for on/off ramp, but I limit my interaction with the exchange as much as possible. I will never have more than 30$ lying around Coinbase as I don’t trust them or any other centralized entities.
In this third article, I will discuss a few platforms that I use to limit my interaction with centralized exchanges.
Make purchases with Bitrefill.
Bitrefill is a website I have been using for a couple of years, and it is a fantastic way to make purchases with Bitcoin, Ethereum, and other ERC-20 tokens. It lets you buy a gift card in most countries of the world using Crypto and does not require KYC but only an E-mail address (You can use a burner address as well).
I have been using Bitrefill while traveling worldwide to pay for Hotels, Tech products, Coffees, flights, and other goods. You can live with Crypto. You can even pay your bills if you are located in the USA.
This is an easy platform to use and accessible to anyone. The transfer will only be between you and Bitrefill, and the Gift card will come instantly if you use the Bitcoin lightning Network or in a few minutes with Ethereum or other ERC-20 tokens.
Customer support is reactive. Two years ago, while traveling in France, I bought a gift card and paid with ETH instead of Tether, and they saw my transaction and sent me the gift card right away after I contacted them, so I did not lose any funds.
Using Bitrefill is pretty simple; you don’t have to do a KYC or use a burner email. Go to the website, select your country or country you are traveling to, choose a gift card, and connect your wallet. Once you pay for the gift card, it will get delivered to your email address (depending on the blockchain you are using, it can take quite some time, for example, Bitcoin takes 10 minutes between each block to validate transactions, but the lightning network will be instant).
Bitrefill is available in most of the country, even in El Salvador!
And as you can see, I paid for coffee, hotels, and a flight. Instead of sending your funds to Binance or Coinbas,e you can use Bitrefill.
Get paid in Crypto with DeWork.
DeWork is a new decentralized DAO board to do work and get rewarded in Crypto, DAOs widely use it, and you can make a living when picking tasks on the board.
I used DeWork a couple of times when I launched a DAO last summer to find contributors and pay them with our governance token or contribute to Bankless DAO as a developer.
Whether you like to write a blog post about your favorite projects, build frontend applications with React, or develop a smart contract with solidity, there are many missions on DeWork to start making a living with it.
This is a great way to educate yourself on DAOs, decentralized work, and not using your cash to buy Crypto. If you want to contribute to some tasks, you can introduce yourself and try picking a few jobs you can do that could be a high passive income and long-term investment of your time.
Use LSD 🧘
LSD (Liquid Staking Derivatives) is a way to stake your Ether and become a validator with less than 32 Ether. Currently, most people are using exchanges like Coinbase or Kraken to stake ETH and get a yield, but I don’t think it’s a great idea as the SEC is coming after those exchanges, and once again, you are losing control over your private keys.
You can easily use liquid staking derivatives like Lido Finance or Rocket Pool to stake less than 32 ETH and earn rewards on your ETH instead of directly using a centralized platform.
LSD is not coming without risk as it is smart-contract code so that it can get exploited, but the same applies to the ETH you stake on a centralized platform.
I’m a Rocket Pool and Lido user, so I can recommend using those Dapps for staking ETH.
Decentralized Exchanges are robust.
Since 2020 I have been a heavy user of DEXs. I can understand that paying swap fees might not be accessible to everyone. Still, the power of decentralized exchanges is that anyone can create a pool. It makes it an excellent tool for deploying a project to find exotic tokens that do not exist on centralized exchanges.
As I wrote in my previous article, when using decentralized exchanges, you are also accumulating chances to obtain future Airdrop as you are helping the network to grow.
The fees are not a problem anymore. Now you can go to Optimism or Arbitrum and swap directly via Layer 2 for a few cents.
Coinbase as a FIAT on-ramp is very useful because you can easily send funds directly to the Optimism Network; once your funds are there, you can bridge to different chains using a Bridge like Hop Protocol. You can even go multi-chain if you want to. In the past, I have used Ren Protocol many times to bridge some funds from Ethereum to BTC instead of relying on a centralized exchange.
To conclude, there are a lot of alternatives to ditch centralized exchanges. If you want to use an on/off ramp in a p2p manner, you can also use Bisq network, but I haven’t used it yet, so I can’t recommend it, but I’ve heard only good things about it.