Is It Safe to Leave Bitcoin on a Crypto Exchange?
Prosperity in the cryptocurrency sector depends on various factors. For example, one needs to understand the market trends comprehensively. Also, you must know the appropriate investment strategies to boost your chances of winning the game. However, there's another essential thing many people still don't know. But before identifying them, you should visit https://bitcoinrevolution-dk.com, where you will get help with Bitcoin trading. Registering on the trading platform is free.
Studies show that most scamming or hacking victims usually don't know the security measures to take to keep their funds safe. For instance, some of us own numerous Bitcoins but don't even know where to keep them if we aren't using them soon. In this article, we've explained the reasons you shouldn't leave your Bitcoins on an exchange. But first things first.
What's a Cryptocurrency Exchange?
Cryptocurrency exchanges are platforms where people can purchase and trade various crypto assets, such as Bitcoin and Ethereum. Depending on the website, you can invest in other digital assets such as the Non-FungibleTokens (NFTs) and Defi, among others. Crypto exchanges have various trading resources to give investors an easy time while trading.
Bitcoin trading platforms also come with inbuilt digital wallets where you can store your coins for some time. Notably, most exchanges allow multiple payment options to make the operations as seamless as possible. About a decade ago, we never had many exchange options. However, several robust crypto trading sites have emerged lately.
Moreover, the site is user-friendly and packed with various helpful trading resources. Crypto exchanges have become an essential part of the economy because they employ many people around the globe.
Don't Leave Your Bitcoins on An Exchange
Keeping many Bitcoins on a crypto exchange is a bad idea. Here's why.
You Can Lose Your Funds
While it rarely happens, there are various instances where investors lost the Bitcoins they had kept in exchange-generated wallets. Loss of cryptos on a trading platform may occur due to two main reasons. For example, the company can block or freeze your account as a response to criminal activities detected on the site. These may include scamming, hacking, or other unacceptable acts.
Another possible reason that can make you lose your Bitcoins is the exchange's bankruptcy. And this means they don't have enough funds to process all the withdrawal requests. One may also be unable to access their Bitcoin if there's a massive exit of investors from the exchange they're using.
It Compromises the Safety of Your Funds
Yes! Don't forget the ultimate cryptocurrency safety rule. No one else should know your Bitcoin wallet's private key apart from yourself. But this isn't true when you leave your BTC on an exchange because the inbuilt digital wallets are custodial.
Since the exchange knows your private key, they can access your Bitcoins. However, this kind of arrangement is important when users forget their keys. They'll notify the exchange company and then request their private keys. And this isn't possible with non-custodial Bitcoin wallets because only the account holders know the private key.
There's a Price to Pay
You'll pay some fees any time you make a transaction on some exchanges. While the charges are usually very small, the amount you shall have spent after a long time will be significant. Some investors want to transfer all their Bitcoins to an external digital wallet.
Leaving Bitcoin on an exchange has its benefits and challenges. One notable advantage is that you can request your private key if you forget it. Unfortunately, this option has multiple challenges. For example, keeping cryptos in an exchange-generated digital wallet exposes your private key to the company. And this is against the ultimate rule of keeping your Bitcoins safe.
The other reason you don't want to leave your funds on an exchange is that the company can block or freeze them without notice. Additionally, the platform may become bankrupt, thereby making it unable to process payments. Lastly, some exchanges charge small transaction fees, which may become quite significant over time.