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Should You Keep Crypto on Exchange – 2022 Guide

Everyone who owns crypto understands how important is to store them in the right way. When it comes to this, many people think that it would be a wise idea to keep crypto on an exchange, especially if they are planning to sell them and buy them in the future. Trading crypto is now very popular activity that people are considering, and since there are so many different trading platforms available, they have a wide range of opportunity of this kind. It is, however, important to find a reliable and credible trading platform that offers you all the necessary details you need to know about. If you are considering to start with the crypto trading journey, you can visit dubai-profitnow.com. Additionaly, in this article, we will talk about whether or not should you make the decision about keeping your crypto on an exchange. Additionally, we will mention some other ways that you can consider when it comes to storing crypto.

Should You Store Crypto on an Exchange?

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The only disadvantage of crypto markets is the fact that they tend to be volatile. This is exactly why many traders do not have long-term trust regarding the crypto market, so they are handling crypto in some shorter terms. Even though these traders generally hold short-term positions, they are holding their capital in a stable coin way including USTD and USDC. Tether’s USDT is considered the most popular stable coin on the market. Therefore, for these types of trades, it is a very logical decision to hold their fund on an exchange since they are in a speculative position. However, if they are still waiting for some perfect opportunity, it would be a wise idea for them to store their funds offline way, or in some non-custodial wallet.

When it comes to derivates trading, those types of trades need to ensure their solvency by depositing collateral that will act as a security deposit for the exchange. There are multiple platforms and derivative-centric exchanges that need to comply with these collateral requirements in order to proceed with a trade.

Even though there are so many different types of trades that users can make, they also need to take into consideration the differences between exchanges. People can face a real risk of storing funds on an unreliable platform. When the users are aware of the fact what is safe and what is not, they could make better decisions.

For instance, a platform Coinbase keeps only 2% of its total crypto holdings in a hot wallet, and the rest is in cold storage. Best of all is that the exchange also has the insurance that will cover any potential loss from the hot wallet. This truly adds safety standards.

The prof for that is that someone hacked Binance for almost 7,000 BTC, but the exchange took the whole burden of the loss and cover it with the exchange’s insurance fund.

Other ways to store your crypto

If you are looking to find more details about other ways of how you can store your crypto, you will find them in the text below.

Consider the hot wallet option of storing crypto funds

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Many of you probably heard the hot and called wallet terms and you did not really understand what are they referring to. Now, you are going to find out! The hot wallet actually refers to the online wallet option that an individual can use on any device that is connected to the internet, whether it is a mobile phone, computer, or tablet.

In general, this method of storing crypto is very convenient, especially when we take into consideration how all the transactions are completed online. However, you should know that hot wallets are created to keep or to use some small percentage of cryptocurrencies.

Even though hot wallets are an effective and practical way of storing, as we said, you should know that they can come with some dose of risk. Since this is an online method of storing crypto funds, there are some minimal chances that funds can be lost, however, this is a rare scenario. This can happen during exchanges. People also have the option to use exchange wallets that include a custodial account that a particular exchange provides to the users.

Additionally, it is important to note that this wallet is not a private key holder. Many people are storing their crypto funds on the exchange wallet since they are planning to sway those funds to another coin or cryptocurrency.

Consider the cold wallet option of storing crypto funds

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When it comes to a cold wallet, you should assume that this is the offline wallet option. This is actually considered the safest form of storing crypto funds since it is not connected to the internet through any device. However, there are still some minimal chances that funds can be stolen.

The reason for this is that the private key and the address are not connected to the internet. In general, they are using specially created software that provides users to view their private information and make whatever change they want without risking their private key. As you can conclude, these are very different forms of storing crypto funds.

Therefore, your final decision about what type of storage you will choose depends on your individual needs and preferences. You should consider multiple factors, including security needs, what kind of tool you want to use, etc, and make the decision.

More about hot and cold wallets options

Since crypto funds become more and more popular by each day, it is completely logical that people are seeking the safest place to store them and not thinking about what something can happen. As we said there are primarily two kinds of wallets – the hot wallet which refers to the online method and the cold wallet which refers to the offline storing method. In the following text, you will find out several types of cryptocurrency storage devices and tolls that you can choose from.

You can consider using Desktop Wallets, which is the method of online crypto fund storage. It is way more secure than most online crypto storage bases. Additionally, it is very convenient since it supports every OS. You can also control your private keys and there would not be any third party included in your transactions.

There are also mobile wallets, that are similar to the previously mentioned storage option. They are also considered hot wallets and they offer you to carry your mobile and access your crypto funds. However, you should know that this is not considered a very safe storage option.

You can also use a paper type of wallet, which is an offline storage method. They are very effective as well as secure. This refers to a printed paper that comes with a QR code and your private keys for accessing crypto funds.

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