How Safe is Your Crypto Currency Exchange?
It's a well known fact that any crypto funds stored on an exchange are not actually owned by you anymore. But despite this fact, so many of us are more than willing to keep vast sums of our stash on there. The memories of Mt. Gox fade further away each passing day, until we get the next "black swan" event to hit the crypto markets hard. But things are changing with independent bodies looking to rate individual exchanges on a merit basis.
The Financial Services and Markets Authority (FSMA) in Belgium are compiling a list of crypto investment sites to assess whether they are a trusted entity or not. And these regulatory groups are growing in number by the day as more horror stories come out of investors losing thousands upon thousands of dollars to unscrupulous scammers. So far, their list has hit 120 different websites more many more to come.
However, when it comes to exchanges, crypto traders seem happy enough to shoulder the burden of responsibility and if things go pear-shaped, only then will the "real" panic set in. The rise of the decentralised exchange is helping the situation to some extent, but the fact remains that you are placing your funds in the hands of a third party and entrusting them to keep it secure. A dangerous move, by anyone's viewpoint.
Although as crypto gain mass adoption over time, I see this problem gaining more exposure as people simply won't understand how to safe-keep their digital tokens. Maybe governmental regulation will assist in this respect, but it's much easier to point fingers at a dodgy looking website making ridiculous claims of riches than an exchange where people can freely trade on. The impetus for security initiatives in regards to the crypto lay-person, will become extremely important and I believe a surge of third party organisations, like the FSMA, will come to the fore to lend a guiding hand.
But for now the golden rule stands as simply this: Crypto that is not in your possession is as good as gone. If you're looking at your crypto portfolio valuation within an exchanges wallet, it's just a set of dollar-based numerals. Nothing more. Unless you retrieve it to a privately-owned wallet by you, that is. This will be the biggest problem facing our growing eco-system moving forward hence the introduction of security tokens should be big this year and going into the next.
Interesting times ahead, to say the least.
Thanks @ezzy for such an eyes 👁 👁 opener! We’re responsible for our actions.
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Without a doubt! Forewarned is forearmed, as they say. :)
I am fond of @ezzy s posts as these are informative.
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Certainly an important subject for STOs as institutions normally manage funds for others or in the benefit of shareholders and therefore bear the fiduciary responsibilities to safeguard them. This is why custodial solutions are so bullish as they present a bridge to handle that although they are still not under the controlnof the owners if there. However, it will be a start for some trying a hybrid approach.
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