When you send crypto to an Exchange it's no longer yours untill you get it out again.
For a while now I have moved all (the little amounts) of Cryptocurrencies I still had from exchanges.
I was afraid that with the rise of crypto this year exchanges would have a tough time handling all the new traffic. That was my reasoning.
And although the amount wasn't huge (around $1000) I still didn't feel like losing it.
Note: Everything under here are my personal thoughts.
You have to realize that when you send crypto to an exchange that crypto is no longer yours. You no longer own it.
What you get in return for sending your crypto to an exchange is an entry in the ledger of the exchange.
This is why it's so easy to exchange BTC to LTC and from LTC to MONERO and from MONERO to STEEM on an exchange. They are just ledger entries that change.
It's not crypto moving from wallet to wallet. That would take way too long.
You are trading on the presumption that they actually own the crypto you are trading. But of this, you can't be sure.
The moment you take you crypto out of the exchange to a private wallet of which you own all the keys it's yours again. You control it.
In a sense, I guess it could be like fractional banking. As long as if only a certain percentage of the users take their crypto out everything will keep running. If all the users request their crypto back, they might not have it.
Getting used to an exchange
Getting used to the existence of an exchange is very dangerous. Years and years of trading on the same exchange will make you trust an exchange and you forget about the risks.
BTC-E is such an exchange, it's been around since 2011. But one morning you wake up. And this is what you see:
It would instantly make me nervous. Especially when you read this:
"BTC-e ceased operation on 25 July 2017, following the arrest of BTC-e administrator Alexander Vinnik." - Wikipedia
I'm not saying BTC-E is over. It might very well come back but if it doesn't, your crypto is now gone. All of it.
Poloniex
I asked someone from the Steem marketing team yesterday if they could give me any information about the situation over at Poloniex. You can't deposit or withdrawal STEEM there. (and it's not the only coin)
I was told they make it as easy as they can for exchanges to communicated with the Steem blockchain. But it's tough for exchanges to maintain all the nodes for all the different coins.
That might very well be true but for me, it's enough to get nervous. Because it USED to work just fine.
Remember that all you own on Poloniex is ledger entries. What you think you might have on there might not be what they actually have. (this thought is always in the back of my mind).
I, therefore, would suggest changing the ledger entries of the coins you can't withdraw to ledger entries of coins you can withdrawal and get them out for now.
For me, the situation at Poloniex right now doesn't feel right.
Better safe than sorry.
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In general that is absolutely right because the most exchanges are centralized. But there are exchanges that are 100% safe to keep crypto in it !!! That are the pure DECENTRALIZED exchanges like the well known bitshares DEX https://bitshares.org/
The blockchain handles everything there, NOT a random individual.
Thanks for sharing that...yes I was just thinking recently about all my altcoins and where to safely store them. Sure, it's easy to keep bitcoin and a few of the other "big boys" safe since there are plenty of wallet options for Etherium, Litecoin, Dash, and a handful of others. However, a few of my favorite cryptos don't seem to have many wallet options like Monero, Stratis, Veritaseum, Waves, etc. I will definitely check bitshares out. Upvoted!!
This looks really good, I will check it out.
thanks
I upvoted this comment because I agree with what you wrote and think that others should read about this.
Confirm what I wrote... So I confirm you are not a bot....
The information about BTC-E was the most interesting for me because I hadn't heard about that before and I am curious what happened and how that affected people's crypto. I was originally trying to reply to liondani's comment, I have heard good things about bitshare. Hope this comment will clear up the confusion.
hahahahaha nice call!
I've recently moved to Whaleclub for my trading/exchange. They actually store your coins in an offline wallet. Comment or PM me with any questions. I'd like to get a group of us together possibly to discuss current events in the crypto space :P
https://whaleclub.co/join/NcE0h - 30% bonus on first deposit with my link!
Who controls the private keys is the question.
Privacy and security are at the core of everything Whaleclub makes. 2-factor authentication adds an extra layer of security. And high-grade encryption ensures the privacy of sensitive information. You ultimately control your wallet.
Yes but who controls the keys of your deposited cryptos? You still don't answered my question. What if they shut-down and run with your money/crypto's?
Any exchange can shutdown and take your coins in them...? As always store your bitcoin when not trading in a hard wallet.
Thats the beauty of DECENTRALIZED exchanges like bitshares !!! They can't shutdown! You can leave your coins there !!!
Bitshares is confusing. Ease of use is what the people want. Like Bittrex, Coinbase, and WhaleClub!
https://steemit.com/forex/@greenbuff/whaleclub-my-new-favorite-exchange-here-s-why
check out this article
BAM!!!!
yup, you are right @liondani. we need more decentralized exchangers
How can a noob verify that the exchange us real and the block chain handles it.
hello my friend thanks for useful comment it can help to keep safe way to have transduction of the crypto coin but i think to try to learn about the system of this exchange.is combined with nice technology i upvote your comment because is so interesting safe way to try and learn but i have questions about the EXODUS wallet because is exchange and wallet do you think is safe as well .what is you recommend about EXODUS ??im so confused because of some body say try this exchange and others say the some thing about other exchange ??thanks for your information it helps to steemir here
Exodus is safe. Recommended 100%
Thanksss for answer my rich friend
very good advice.
I am still very new to crypto, but I have been doing research and I agree that bitshares seems like the most logical solution I found since it is a decentralized exchange. However with bitshares It does not seem like there is a way to convert crypto into your own countries currency, or am I mistaken..? In your opinion what is the best way to convert crypto into your own countries currency, preferably something I can link my paypal account to...?
SUPER useful comment!
Thank you so much. This is always what I hope Steemit will be is good articles getting better with comments!
Yes, very good point. I never keep coin in an exchange more than a day. No point.
Can't imagine why anyone would trust an exchange for more than a day..
The old adage, "If you don't hold it, it's not yours" is never more true than in this digital currency world we live in today. I know here in the US, the fractional reserve banking system only has to have 10% of your deposits on hand and can lend out the other 90% in essence to create more money out of thin air. Smoke and mirrors at it's finest.
I've looked at cypto exchanges like this, the banks and financial trading institutions are regulated by the FSOC and SEC here in the US and are still constantly getting in trouble for corruption and manipulation (and there's a hell of lot more they get away with they don't get busted for), what on earth could be going on in the crypto space where there is no regulation whatsoever?
While in a perfect world we'd all love to have no financial oversight and be able to enjoy more freedom, a very disturbing thing always seems to happen when some businesses are entrusted with other peoples money.
I agree with you that something at Polo just smells bad. These exchanges are set up to make money, that's their sole purpose. Their loyalty should be with their customers first and foremost, but if history has taught us anything, it's shown us when it comes to money, anything can and will happen.
Something very important happened Monday concerning crypto and possible regulation that seems to have flown under the radar, here's a quote from the Wall Street Journal: “On Monday, a bitcoin options exchange called LedgerX won approval from the Commodity Futures Trading Commission to clear bitcoin options, making it the first U.S. federally regulated platform of its kind.” What could this mean for crypto? A ton of big institutional money could soon be flooding into the crypto space in the near future that could moon BTC, but also the caveat of having to deal with paper derivatives that can easily be manipulated by traders with deep pockets.
There's a ton of interesting developments going on now in the crypto world. I have a feeling it's going to be a fun but sometimes bumpy ride.
It is true that whatever you put into an exchange is no longer yours. You no longer have the private keys nor any control of that amount in the exchange and if the exchange randomly disappears or decides to disable their wallet like Poloniex then all your crypto is gone.
That is why it is always good to use a hard wallet or a paper wallet rather than keeping your money in an exchange.
You may think it will save you time if you don't have to transfer between your wallet and exchange and that if you have invested in multiple coins it is easier just to leave it in one place, however, most of the time things don't last forever and if an exchange disappears then RIP your crypto.
Hopefully this post will save some peoples crypto @exyle! :)
i like your approach of being extra vigilant. that will not only save you from any contingent consequences but also allow you to have positive access towards market.
I know some of my friends have their crypto's for weeks on poloniex. Just told them that that's a really bad idea. Thnx to steem I got to know all the issues. Thanks everyone.
It's good to inform others!
I think in general it's best to keep your crypto off an exchange. It's best kept in wallet you control.
@exyle you nailed it again.
I felt for it since most of us were thinking the bank system is the way to save *money. Not anymore
I do have some coins on poloniex and they are disabled. I cannot move them. Since then I slowed down and I am thinking hard before I do any transaction with them.
I see the importance of using Exodus now.
I have seen Gemini. I don't know much about it.
Thank you @exyle for your input.
Keep on steemit.
Funny thing happened yesterday, Poloniex finally unfroze Einsteinium trading and deposits after almost a month. Almost immediately, it doubled in value. So many other currency wallets have also been disabled on Poloniex for quite a few weeks. BCN, BTM and EMC2 are just a few of the examples. Are they trying to create pumps? I don't know, they've just lost all of my trust.
I completely agree and have been saying this for sometime. I was burned by Mt Gox and will never again leave crypto on an exchange. I research the trade, transfer in, trade, transfer out. It does limit my trading options but I'm not really a day trader so it's not a real sacrifice. Iam much happier knowing I control the keys and if the exchange goes belly up, I still have my keys.
I stopped day trading as well. Controlling your keys gives peace of mind.