Why Bull Bitcoin is immune from FTX collapse and “crypto contagion”

5 mins

over 1 year ago

Francis Pouliot
Francis Pouliot


Why Bull Bitcoin is immune from FTX collapse and “crypto contagion”

One of the biggest “crypto” exchanges in the world, FTX, has recently revealed its insolvency and that it has effectively lost (stolen?) billions of dollars of their users’ money. Many crypto exchanges and service providers were trusting FTX with their users’ money, causing users who had no business with FTX to lose money as well. Other Bitcoin companies were doing business with the companies that were trusting FTX, and these businesses may also have accidentally compromised their users’ money and suffered disruptions of service in the process. This phenomenon is what people refer to when they say there is “contagion” in the crypto markets following the collapse of FTX.

Bull Bitcoin is completely immune from this contagion. Our operational capacity has remained at 100% and there will be no disruption of our services. In fact, we are recording some our highest trading volumes, deposits and withdrawal volumes. None of our customers’ funds are at risk, none of our own funds are at risk.

In this article, I will explain why Bull Bitcoin is the safest Bitcoin exchange in Canada to buy and sell Bitcoin, and potentially one of the safest online Bitcoin exchange in the world.

1. Bull Bitcoin is a non-custodial OTC desk

Bull Bitcoin is in reality an OTC desk, but one that is fully automated. We do not match buyers and sellers on an orderbook. When users buy Bitcoin, they buy their Bitcoin directly from our own inventory of bitcoins. When users sell Bitcoin, we are buying the Bitcoin from them using our own fiat.

As soon as you click “Buy Bitcoin” on Bull Bitcoin, the bitcoins are sent to your own Bitcoin wallet right away. These bitcoins come from Bull Bitcoin’s own inventory of bitcoins held on our Bitcoin Core node. We never keep the bitcoins of our users in custody. Bull Bitcoin users do not, and cannot, keep a Bitcoin balance on their Bull Bitcoin account. Users cannot even buy Bitcoin without first providing their Bitcoin address. If we don’t hold users’ bitcoins, we can’t lose users’ bitcoins, it’s that simple.

You also cannot deposit Bitcoin in a Bull Bitcoin account and sell it later. As soon as you send Bitcoin to Bull Bitcoin, they are considered as having been sold to us and no longer belong to you. The moment your Bitcoin transaction is confirmed, we owe you the equivalent amount in fiat and we initiate a bank transfer or bill payment to your specified recipient as soon as possible.

Pretty much every major Bitcoin exchange that you may have heard about such as Shakepay, Coinbase, Swan, Kraken, Binance, FTX, Crypto (dot) com, etc. are custodial exchanges. They will let you buy Bitcoin and keep them for you, and technically you should be allowed to withdraw the Bitcoin at a later date (although some others don’t even let you do that). As we have seen recently with the collapse of FTX, users do not always withdraw the Bitcoin before it’s too late. A non-custodial exchange prevents users from making this mistake by forcing them to withdraw the Bitcoin to their own wallets as soon as they are purchased.

2. Bull Bitcoin does not use third party wallets to manage its bitcoins transactions

Most Bitcoin exchanges use third-party institutional wallet providers to send and receive Bitcoin transactions, and to keep custody of their bitcoins and the bitcoins of their users. This is the case for example of Shakepay, which keeps its users’ Bitcoin on Coinbase, Crypto (dot) com, which uses Prime Trust and Nexo, which uses Bitgo.

Bull Bitcoin has developed its own self-hosted, open-source Bitcoin wallet system called Cyphernode specifically to avoid these custodial service providers. Cyphernode was created in 2018 so that we would never be dependent on custodians and remain fully in control of our bitcoins and transactions. Cyphernode is a truly a game-changer when it comes to running a non-custodial exchange. Hundreds of millions of dollars worth of Bitcoin are processed by Cyphernode each year.

Our users’ Bitcoin deposits are received directly in our own wallets, connected to our own Bitcoin and Lightning node. Our users’ withdrawals are sent directly from our own Bitcoin Core or Lightning full nodes.

Another benefit of this is that we don’t have to share our transaction history with any third party provider, which greatly protects the privacy of our users, as well as our own privacy.

No third parties, no exceptions.

3. Bull Bitcoin uses traditional Canadian banks with no exposure to “crypto”

When you send or receive fiat transfers to and from Bull Bitcoin, funds are held with traditional Canadian banks that do not deal in crypto activities. Unlike some of the specialized foreign “crypto banks” that also themselves deal in crypto activities such as crypto-backed loans, our banks are boring old regulated legacy Canadian institutions.

This is important, because although we are a non-custodial Bitcoin exchange and payments provider, we do hold the fiat of users in custody temporarily between the time of their fiat deposit and their Bitcoin purchase. We allow users to keep some fiat in their Bull Bitcoin account so they can purchase their Bitcoin using a dollar-cost-averaging strategy, which is the trading strategy that we recommend.

The fiat of our users as shown in their Bull Bitcoin account balance is backed 1:1 by dollars in a Canadian bank account.

4. Bull Bitcoin does not borrow or lend money to anyone

Bull Bitcoin does not owe any money to any third party. Bull Bitcoin does not lend any money to anybody. Bull Bitcoin has been operating since 2015, and we have steadily been increasing our reserve of fiat and Bitcoin over the years to be able to have our own liquidity without needing to borrow from third parties.

5. Bull Bitcoin does not touch any shitcoin or stablecoin

Bull Bitcoin does not deal in shitcoins, and does not keep any of its funds in stablecoins. 100% of the fiat currency that we temporarily hold for our users is stored in traditional Canadian banks.

We are completely unaffected by anything that happens in the shitcoin or stablecoin industries.

Bull Bitcoin’s values: cypherpunk Bitcoin maximalism

The official mission of Bull Bitcoin is to destroy fiat currency by onboarding individuals and businesses to Bitcoin the right way. We want our users to take control of their money. We want our users to experience true financial sovereignty and free themselves from the shackles of custodians and government money.

It would have required much less engineering work to rely on third parties to manage our bitcoins holdings and transaction processing.

We would have made a lot more money by selling shitcoins.

User acquisition would have been far easier if we had chosen to act as their custodians.

But all of these bad business practices go against our core values, on which we will never compromise.

Bitcoin self-custody is much easier than most people think. Ultimately, all you have to do to be secure is install an open-source Bitcoin wallet, write down your backup seed words and remember your passphrase. Many exchanges think that users are too incompetent or lazy to take on this responsibility for themselves. We think differently. We believe in raising the standard and appealing not to the faults of our users, but to their qualities: resourcefulness, independence, intelligence, moral fortitude and the desire for freedom.

Finally, Bull Bitcoin is entirely self-funded. We never took any money from VCs or banks. All of our operations are funded by the profits generated from our services. By using Bull Bitcoin, you are voting with your money, you are encouraging best practices and you are supporting our mission.

If you want to get involved, you can join The Mission – an exclusive program for Bull Bitcoin super fans that will let you earn money by promoting our brand, and participate in a community of radical maximalists that share the same mission: to destroy fiat and establish The Bitcoin Standard.

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