The act of leaving crypto on exchanges is very common among crypto enthusiasts. However, in the times of increasing crypto frauds, scams, and glitches that caused millions and billions of losses, is it really safe to leave your risky assets at further risk? The answer to this might be much more complex than you might think. This is because of the updating and volatile nature of the crypto domain. At one point you might think that the conditions are perfectly fine and at the other moment a mishap could occur. So, what to do in fear of that situation? This is what will be discussed in detail in this article.
Crypto trading has been gaining immense popularity in recent months and has also triggered demand for crypto exchange platforms to be able to freely deal with this volatile asset. Several crypto trading platforms have also released wallets for storing crypto funds. This has aided users in many ways but might also cause damage to them. There are recent incidents to prove the same. Even a major exchange, Coinbase, failed to maintain track of the wallet fund deposits and thousands of users had lost access to GYEN in their wallets recently. Therefore, it is necessary to make the correct choice for storing your crypto assets.
Leaving Crypto On Exchanges: Benefits & Dangers
Leaving crypto on exchanges does have some potential benefits that have been listed below.
- Easy Trade: One can easily trade crypto through the assets available on any crypto exchange platform. This is because these exchanges are designed to optimize the trading experience for their users and ensure safe crypto trade.
- Convenience: It is way more convenient to store crypto in an exchange platform rather than looking for secure wallets and then transferring the value to them.
- Trade Pairs: Crypto exchanges enable you to profit from the price difference in two digital currencies as you can trade these crypto pairs against one another.
Though leaving crypto on exchanges mostly doesn’t lead to any negative outcome, it is not always necessary. Therefore, here is a list of risks and dangers linked with it.
- Theft: The crypto exchange security might not be enough sometimes even with the utmost attention. However, there are still huge chances of your wallet being hacked and your crypto assets being lost. This is the biggest danger that one can face if they irresponsibly leave crypto on exchanges.
- Unreliable: Even major crypto trading networks can become unreliable at times as they might abruptly go offline and face technical glitches often.
- Crypto Frauds: In the past, there were incidents wherein some crypto exchanges had taken their users’ crypto funds and never returned them. This can happen if one doesn’t research about the platform before adding investments to it.
- Fear of Bankruptcy: At any point, a crypto trading network can go bankrupt, and once that happens all your crypto funds are permanently lost.
- Long Term Risks: If somebody is leaving crypto on exchanges, then they might lose funds in the long term as crypto price actions are extremely volatile. Therefore, it is recommended not to leave your crypto on an exchange for too long.
How To Protect Your Crypto Funds?
Even after reading the aforementioned dangers, if you still are motivated enough to undertake the risky act of leaving crypto on exchanges, then here are some ways to protect them. The methods and steps for the same are listed below.
- Make sure to set a strong password for your account on the exchange.
- Enable two-factor authentication for better security.
- Try not to use public Wi-fi networks.
- Be cautious of phishing scams and other cyber attacks.
- Update your computer and antivirus system as and when available.
- Store crypto assets in a secure online or offline wallet.
The several benefits that the crypto domain provides would be completely flat if you do not take the initiative of storing them properly. Therefore, you should try considering various offline and online wallets that are available. However, it is recommended to use secure offline wallets for better security. This will free you from any burden or stress of losing your crypto assets. A number of such offline hardware wallet services have been introduced on the belief that the future of money is indeed digital. Some of the best hardware crypto wallet examples are Trezor, Ledger Nano S, CoolWallet S, and Ledger Nano X. However, these might not support all the cryptos available.
Coinbase: Is It Safe To Leave Your Crypto Here?
So, we did mention the exchange earlier as an example of mishaps that might occur with leaving crypto on exchanges. This is why we will be discussing this point in detail to provide clarity on the subject and not directly blame any exchange. Coinbase is a major crypto exchange platform that has garnered immense trust over time and is considered to be one of the safe crypto exchanges. However, in recent months, the platform has witnessed loads of technical glitches and issues that have shaken the reputation Coinbase had built over time. Therefore, people have been hesitating to keep crypto currency investments they own on the platform.
The platform is indeed trying hard to fix these bugs and glitches as soon as possible but it repeatedly either stops working or even leads to loss of crypto assets for some. User reports for Coinbase on Downdetector indicate that many of them aren’t able to access the exchange for trading crypto. These reports are not large in number but are definitely consistent.
Last year, in mid-November, a significant technical error wiped off the Coinbase users’ GYEN investments and also made the crypto non-tradable on the platform. These funds weren’t accessible for a long time neither on the Coinbase app nor the wallet. Users also made tweets regarding the same and mentioned that they might have been overcharged as the GYEN price was the same even hours later. This frozen price update was another glitch faced by the platform. However, after a few days, people got their crypto funds back in their Coinbase wallet through Coinbase Support though a small section of investors was still waiting for the same.
Wallet Or Exchange: Which is Safer?
Though we earlier mentioned using wallets over exchanges, it is necessary to discuss the subject in a detailed manner. Both these methods of storing crypto have their own merits and demerits since at the end of the day the assets are the riskiest. Moreover, you can’t necessarily stick to one way as it is always better to have possible backups. Therefore, it is highly advised to store your digital assets in parts on both a crypto wallet and exchange. This way you can still make trades on exchange while the rest of your investments are safe in your wallet.
In the case of leaving crypto on exchanges, you should conduct extensive research on the platform and be sure of its security before investing in it. This step is mandatory since there have been several frauds and scams in the name of crypto exchanges. Therefore, it is recommended to read reviews for the platform and even go through customer ratings wherever available. Also, one should prefer using popularly known and trusted crypto trading platforms.
If you are someone who wants to store crypto funds for the long term, then choose wallets for that. This is because these wallets are not that likely to be hacked compared to crypto exchange accounts. So, they assure better protection of your digital assets. Further, these assets are not much affected by the continuous and abrupt price movements on the exchanges.
To summarize, we can say that both these modes of crypto storage have their own advantages and limitations. Therefore, it comes down to the crypto holder to choose which option to go with. Leaving crypto on exchanges and storing them in offline or online wallets both require careful decision-making and supervision. Therefore, identify your personal needs and make the choice accordingly. However, nobody can ascertain the best crypto wallet or the most secure crypto exchange by any means and therefore, the choice would still remain a gamble and won’t be as secure.
Leaving crypto on exchanges can be more of a risk than a benefit without proper research and decision-making. This is why one should be extremely cautious while undertaking such an act of responsibility. The crypto market is itself enough to drain off any funds that you might have gained, therefore, there is no room for further risks. So, it is advised to store a part of your crypto assets in secure online or offline wallets for better security and protection.