Block-the-talk; ‘Karan Ambwani from the dYdX Foundation on how blockchain is being used to keep digital assets safe

Karan Ambwani, India Head, Contributor to dYdX Foundation, talks about the importance of blockchain with FE Blockchain.

What are the three best practices that today’s youth should follow when it comes to digital assets?

1. Have a long-term view of how the digital world is developing, what the latest trends and developments may mean, and how each of us can contribute – instead of just looking at short-term financial returns.

2. Understand self-management of assets, use decentralized applications and store assets on hardware wallets to manage your risks and become less vulnerable to online threats. Be careful before sharing personal information online and use multi-factor authentication where possible when using digital services.

3. Invest more time in educating yourself about how the web3 networks work by learning about consensus mechanisms, smart contract development, tokenomics, and engage more actively in this community-led movement by contributing to forum discussions, participating in governance.

How can blockchain be used to keep digital assets safe? What apps can consumers use?

Blockchain allows information and assets to be stored in a decentralized database that is distributed over a network of computers, rather than being stored on a centralized server. This decentralized architecture of the system makes it less viable, both technically and financially, for bad actors to access or change the data.

Blockchain allows the development of decentralized digital solutions powered by open source smart contracts with the same set of rules for everyone. They offer ways for users to safely store and manage their money without giving up custody of their assets. There are many different applications from digital art and collectibles to decentralized finance (DeFi) applications. The applications use digital assets as mechanisms to stimulate participation, and manage and leverage app ecosystems for specific use cases.

What are three tips you would give to people doing crypto trading?

In my personal opinion, there are a few things to keep in mind, and I want to remind you that none of this is financial advice.

1. Do your own research to understand the market and the specific digital asset you are interested in trading. This includes understanding the technology behind the asset, the team behind the project and any potential risks or limitations. Also, be very careful and conservative if you trade with leverage as it amplifies your risk.

2. Diversify your portfolio by investing and using a variety of different financial instruments and services to reduce risk. Don’t trust unregulated centralized services with all your assets and learn to use battle-tested open source decentralized alternatives.

3. Use a secure wallet to store your money, such as a hardware wallet and one that offers strong security features such as multi-factor authentication and a secure recovery process.

It is also important to remember that crypto products and NFTs are unregulated and can be very risky. There can be no regulatory recourse for losses from such transactions.

Which according to you is the country that is leading in the space and the Indian startup ecosystem can pick up the best use cases?

A few factors that can define whether a particular country is a leader in the web3 industry are -they have abundant technical talent, entrepreneurs have easy access to capital, and the country has an industry-friendly regulatory framework. It is difficult to say which country is currently leading the development, as there are many countries with active communities and companies working in this area. Where some countries are open to adoption at the national level like El Salvador, some have regulatory sandboxes for development or clear operational frameworks like in Singapore and Japan, Switzerland’s regulatory clarity and legal certainty for crypto companies, or some with effective tax regimes like Portugal, UAE and others .

India is in a unique position with an abundant skilled workforce, with many companies working in the digital assets domain and generally good interest from investors to support. Furthermore, the Indian regulators have taken an active interest in learning from best practices around the world and thinking about a global regulatory framework that will be very valuable for the long-term use of Web3.0.

What are the disadvantages of blockchain?

There are usually limitations with new technology in the early days. The technology continues to improve and mature over time. In recent years, scalability and transaction throughput have been the biggest bottlenecks for rapid adoption. This has since been greatly improved with Layer-2 solutions and superb app chains. The dYdX protocol, for example, is currently built on Starkwave which is a highly scalable Ethereum L2 solution, with no gas fees for transactions. dYdX Trading is now working on building V4 of the protocol, a standalone blockchain based on the Cosmos SDK. This is expected to improve the scalability of the application manifold.

Another common criticism of blockchain-based applications is that they are quite complex for retail users, and the user experience is still not polished enough for a smooth onboarding. Because of this reason, many users still end up relying on unregulated centralized exchanges or lending products that they find comfort in using, but end up losing assets if the companies behind these products lose user funds or go bankrupt.

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