Keeping your precious Cryptocurrency on a Crypto exchange might seem like an excellent idea at the beginning.

Nonetheless, that’ll only happen if you’re planning to buy or sell whatever you have on the go. In case you’re thinking about a long-term investment, it won’t be the right option for your purpose. Why? Well, the world of Cryptocurrency can be quite vile at times.

And, amongst the issues most of us face in the market, scamming is definitely the most prominent one. And, we have statistics to back up this notion as well.

According to a report, more than $1.3 billion worth of Cryptocurrency has been stolen since 2011. And, the numbers are growing at an ever-growing pace.

So, what should you do, then? Please read more to know about the answer yourself.


Crypto Exchanges – The Facts You Didn’t Know

Unlike a Cryptocurrency program, an exchange doesn’t really take the utmost benefit of the blockchain technology. Therefore, its security level isn’t too high at all.

Hence, they are much more prone to hacking attacks. In addition to this, you should also consider the following facts –

  • On average, the exchanges lose over $2.7 million worth of Cryptocurrency, and this number will increase even more in the near future.
  • Usually, an exchange doesn’t come with a top-notch cybersecurity program. Hence, it becomes almost impossible for them to prevent elaborate hacks.
  • Cryptocurrency has already become a prime target for the hackers. Around 850,000 BTCs were stolen already in 2011, and the number has kept increasing since then.

A recent example of the failure of Crypto exchanges would be the Coincheck heist, wherein the hackers stole NEM tokens worth $530 million.


Why Should You Avoid Using A Crypto Exchange?

While the security loophole is definitely the most glaring downside of a Crypto exchange, it’s not the only one, though. There are some other reasons why you should not use the aforesaid program. Please keep reading to know more about them.


Problem – 1: Not Having Any Control Over Your Private Keys

Every Crypto wallet comes with two keys – a private one and a public one. Usually, the latter is used as the address of your digital pocketbook. Conversely, the former is all about keeping your wallet well-protected… almost like a password.

However, unlike the aforesaid, a Crypto exchange only comes with a single key. And, this is quite helpful, especially if you forget about your private key for some reason. But, you won’t have complete control over it. And, that’s pretty risky, in our opinion.


Problem – 2: Can Be Blocked Or Frozen

If the exchange wallet programmer finds some sort of problem with an account, they’ll freeze or block it almost instantly. And, you won’t get a single notice for the same. In some cases, if the wallet goes bankrupt, it’ll do the same too, and you’ll lose whatever you’ve kept there.

A prime example of such an incident is Binance, and it “freezing the account of some of their consumers” in 2021. The worst thing is that the developer team didn’t even explain the core reason behind it. Coinbase also did the same thing in 2020.


Problem – 3: Fees

Some exchange wallets tend to levy fees on each of your transactions too. Even though it’s quite marginal, they can keep adding up over time and become too expensive to handle.

Therefore, it’s always better to pay up the money whenever you make a transaction. Or, it’ll be even better if you used something else, like a dedicated wallet.


Seek For The Best Alternative!

An exchange wallet is also known as a custodial wallet, as you’re not the only one handling the custody of your account. And, that’s not safe at all.

Thus, if you’re considering doing a long-term investment, it’s always best to opt for a wallet that has a non-custodial design or mechanism.

This will definitely be more secure although you may have to keep the information of both your private and public keys in mind. But, you’ll have complete control over your wallet too!