If there is one thing that you need to remember when entering the crypto markets, it is definitely this one fact. Not your keys, not your coins. This applies for bitcoin, ethereum and all other cryptocurrencies out there. The recent freezing of withdrawals on the exchange OKEx. amplified this belief even further.
While this may be a temporary freeze on funds, this furthers the lowered confidence in exchanges as of recently. Just a month ago South Korea's largest exchange, Bithumb, was under investigation by the police. Then just a week ago Bitmex had a similar situation. And now we are having the same problems with OKEx.
If you start to think critically about similarities with these situations, they have all done major business in future derivatives, and perhaps the government is clamping down on them because of this fact. But this is pure speculation on my part. Then you can look even more into the history of cryptocurrency exchanges and look at the situations that happened at Mt. Gox, Coincheck and others.
When entering the crypto markets it is very important to understand that you are entering a market that is volatile and naturally high-risk. When you keep your funds on a centralized exchanged you are just compounding this risk even more. The approach that I take with my crypto funds is to only keep funds on an exchange for when I have a purpose for it to be there. Maybe I am staking a coin with a certain exchange, or I'm wanting to convert it to a different coin, or perhaps I'm preparing to sell out of a position.
This warning not only applies to funds on centralized exchanges, but also funds being lent out to DeFi or lending services like BlockFi or Celsius. There is a reason you are receiving high interest rates. You are being rewarding by taking on risk by lending out your coins.
Now how can you protect yourself?
It's really easy to do.
My preferred option is to store my cryptocurrency amongst a few different Ledgers. I've had nothing but good experience with it, so I highly recommend it. Just be sure to store your key words in a very safe, and secure place.
For me, staking my coins on an exchange, or lending out to services like Celsius or BlockFi can be too good to resist. And so this is my personal philosophy when using these services. Never lend out more than you are willing to lose. I have somewhat accepted the fact that all the coins I place on these services could vanish one day. But for me, the current return on value is worth it. But never put everything you have onto these places.
Be safe out there!
So what is your approach with storing your coins!? Do you keep funds on exchanges? Do you lend out to services like BlockFi or Celsius? And how has your experience with using a Ledger gone?
As always, thank you for reading!