You might be thinking that keeping your cryptocurrency in an exchange is the safest option. After all, these exchanges are designed to keep digital assets safe and secure.
However, there have been a number of high-profile hacks of exchanges in recent years, which has led many experts to advise against leaving crypto in an exchange.
Here’s why you shouldn’t leave your cryptocurrency in an exchange:
1. Exchanges are a prime target for hackers.
– Exchanges are a prime target for hackers because they offer a direct path to users’ wallets and funds. In addition, many exchanges lack the security controls and procedures needed to protect user data and prevent or detect unauthorized activity. As a result, hackers have been able to successfully steal hundreds of millions of dollars worth of digital currency from exchanges.
In fact, one of the biggest crypto hacks of all time are the Mt. Gox hack with 850,000 Bitcoins stolen from the exchange in 2011 and the Coincheck’s $530 million worth of NEM tokens stolen back in 2018.
What’s more disturbing is that five of the 10 largest crypto heists of all time happened last year. So it goes without saying that it is only a matter of time before another major crypto attack occurs.
2. If the exchange is hacked, your funds could be gone forever.
– If you store your coins on an exchange, you are trusting that exchange to keep your funds safe. However, even the most reputable exchanges have been hacked in the past, and if this happens, your funds could be gone forever.
If you want to protect your cryptocurrency, it is important to store it in a safe and secure wallet. There are many different types of wallets available – hot wallets are hot targets, so keep your crypto safe by storing it cold – and you should choose one that best suits your needs.
Ultimately, the best way to protect your cryptocurrency is to be aware of the risks and take steps to mitigate them. By doing so, you can ensure that your funds are safe and sound.
3. You are not in control of your private keys when you leave your crypto on an exchange.
– When you leave your cryptocurrency on an exchange, you are not in control of your private keys. This means that if the exchange is hacked or goes bankrupt, you could lose your crypto.
It is therefore important to take measures to protect your crypto, such as keeping it in a secure wallet where you control the private keys. You can also use a cryptocurrency exchange that offers insurance against hacks and bankruptcies.
By taking these precautions, you can help ensure that your crypto is safe and secure.
4. Many exchanges have been known to freeze or close user accounts without notice.
– This is often done without any explanation, which can be frustrating for users. This can happen for a variety of reasons, such as suspected fraud or activity that goes against the exchange’s terms of service.
If you’re using a crypto exchange, it’s important to be aware that your account could be frozen or closed at any time. This doesn’t mean that you should avoid using crypto exchanges, but you should be aware of the risk.
5. You may be subject to fees when you leave your cryptocurrency on an exchange.
– When you leave your cryptocurrency on an exchange, you may be subject to fees. These fees can vary depending on the exchange, but they typically range from 0.1% to 0.2% of the total value of the transaction.
That means if you’re leaving $100 worth of cryptocurrency on an exchange, you could be charged a fee of $0.10 to $0.20. While this may not seem like much, it can add up over time, especially if you’re frequently trading or holding large amounts of cryptocurrency on an exchange.
To avoid these fees, you can transfer your cryptocurrency off of the exchange and into a personal wallet. This way, you’ll only be subject to fees when you’re actively trading on an exchange.
Ultimately, it is up to you to decide whether or not you want to leave your crypto in an exchange. However, it is important to be aware of the risks involved in doing so.
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