Cryptocurrency Q&A
Should you store Crypto on an exchange or a non-custodial wallet?
Should you store Crypto on an exchange or a non-custodial wallet?
Caterina
Sun Jul 14 2024
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5 answers
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When it comes to storing cryptocurrency, the question often arises: should you entrust your holdings to a centralized exchange or take control of your own funds in a non-custodial wallet? On the one hand, exchanges offer convenience and ease of use, with built-in trading platforms and liquidity. However, they also pose risks such as the potential for hacks, loss of funds due to platform failures, or even the risk of the exchange freezing withdrawals or denying access to funds. On the flipside, non-custodial wallets give you complete control over your private keys, ensuring that only you have access to your funds. But this also means you're responsible for the security of your wallet and private keys, which can be challenging for those unfamiliar with the intricacies of crypto security. So, which is the better option? Let's delve deeper into the pros and cons of both approaches.
5 answers
TaegeukChampion
Tue Jul 16 2024
In a decentralized system, individuals maintain control over their own funds without reliance on external entities. However, storing cryptos on an exchange effectively transfers this control to a centralized entity.
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CryptoLodestarGuard
Tue Jul 16 2024
This reliance on a third party introduces several risks, including the potential for loss of funds due to exchange hacks or mismanagement.
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Raffaele
Tue Jul 16 2024
The decision to store cryptocurrencies on an exchange, rather than in a non-custodial wallet, involves relinquishing complete ownership of those digital assets.
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emma_carter_doctor
Tue Jul 16 2024
Additionally, there is often a lack of consumer protection for crypto stored on exchanges, meaning that investors may have limited recourse if their funds are lost or stolen.
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KpopHarmonySoul
Tue Jul 16 2024
This approach requires entrusting a third party with the management of your crypto holdings, a step that some may view as incompatible with the decentralized nature of cryptocurrencies.
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