If there is one major thing the recent Cryptsy issues have taught us, it is how users should never store funds on an exchange platform for too long. This is not just true for the world of Bitcoin and digital currency, but also for any financial platform in existence. The main difference is how Bitcoin stimulates users to take control of their finances by keeping funds in self-controlled wallets, whereas fiat currency does not.
Also read: Cryptsy Hit With Class Action Suit in Florida
Stop Giving Up Financial Control
While there are many more lessons to be learned from the Cryptsy debacle, the first and foremost important thing comes in the form of end user responsibility. Every individual user has the power – and the obligation, in a way – to move funds out of any exchange platform in the world as soon as possible.
Unlike what consumers may assume, an exchange is in full control of one’s funds stored there and not the end user. In fact, in some cases making deposits and withdrawals requires third-party authorisation by the exchange operators to credit and release funds. Similar to how bank accounts operate, human involvement is required along the way.
This may sound quite strange, considering how the blockchain was designed to allow for completely autonomous transactions, removing any need for third-party services and companies. For some reason, a lot of Bitcoin and digital currency users store funds in exchange wallets, without giving a second thought as to who is in control of those funds at the time.
Cryptsy is another example of why Bitcoin users should steer away from trusting third-party services altogether. While it is hard to image a major exchange going bankrupt, Cryptsy is not the first one to do so over the course of recent years. Once that happens, user funds are pretty much gone, regardless of how large or small the amount is.
Granted, it can be useful to store some funds in an exchange wallet at all times, especially when relying on day trading or attempting to invest in different digital currencies. At the same time, these users should be the last ones to complain if their funds are lost, as they made the decision to give up financial control of their funds willingly. That being said, it is a horrible feeling to lose money at any time, and we hope you get your money one way or another if you have incurred losses in the recent Cryptsy meltdown.
Store Funds In Wallets You Fully Control
Anyone who takes their financial security seriously in the Bitcoin world needs to ensure their funds are kept in wallets under their control at any given time. Regardless of whether these wallets are stored on a computer, mobile device, or anything else, users can and should control their finances at all times. We have compiled a chart of the top Bitcoin wallets available and specified whether the funds are truly in your controlled and the private keys are stored on your own hardware.
It may seem like a drag to keep funds in a wallet under your control at all times. Think of this principle as storing cash in a wallet, and then leaving that wallet at a stranger’s house. Would you ever be certain you could retrieve it with all of the funds stored inside at any given time? Probably not.
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