Not long ago, the many reports to create awareness to cryptocurrency investors on the very big gap that lies in storing digital assets on the exchange platforms were better explained by true-life experience. It was widely reported on various news websites concerning the Canadian based cryptocurrency exchange founder who died with the password to millions of dollars.
According to reports, the late founder did not give the password to any of the associates, and this means that all money stored on the platform is trapped.
Reading comments on one of the posts that reported this story was a bit sad as some cryptocurrency laymen felt vindicated by their Ponzi scheme criticisms on Bitcoin investment.
Though they have no idea what a cryptocurrency exchange platform is, it does not change the fact that leaving digital assets with such platforms is just like leaving a huge sum of money with a stranger for safe keeping. Coming back for your money, you can be hit with the news that someone broke into the apartment and stole the money or the person you left the money with cannot be found.
What can you do is such a situation? Yes, you can file a lawsuit when you find the person, or you can report to the relevant authorities to recover your money, but the question is “why go through all these stresses for your money?” Since the inception of cryptocurrency exchanges, there has been unending news of hackers breaking into some of the platforms and transferring all the money of investors. The lists of such exchanges are tall.
There are many risks associated with saving a huge amount of money with exchange platforms. Some even operate without a proper license while some of them have no insurance policies to protect investors in case of these unforeseen circumstances.
However, they perfectly execute their role of exchanging fiat or any desired digital currency to a preferred one.
So What Should You Do
In one of my posts, I suggested that storing cryptocurrencies in proper offline wallets is one of the best and safest options out there. All you need to do is to keep your private keys safe and secured. There are safer options like making use of hardware wallets and another method of keeping your funds away from the care of third parties.
NB// I am not discrediting the use of cryptocurrency exchanges. I am just suggesting that investible cryptocurrencies will be safer if they are not left on exchanges, especially when the value is huge.