If you don’t hold your private keys, you don’t own your Bitcoin. The same can be said for pretty much any other cryptocurrency. The recent Cryptopia hack has once again proved that keeping your cryptocurrencies on an exchange is a terrible idea, yet this message still needs highlighting at every opportunity.
With the results of the most recent hack yet to be fully revealed, the damage done is only speculation. It is likely though that many people have lost their money on some of the worst coins out there. Cryptopia was famous for listing many niche coins, which is why many people liked it.
The case of Cryptopia joins a long list of other high-profile exchange hacks, including Mt Gox and Cryptsy. Many other exchanges have suffered from hacks ranging from devastating to manageable.
To make matters worse, the boss of Binance posted a tweet in response to the hack suggesting that storing your coins on reputable exchanges is not a problem. The only issue with such a statement is that reputable exchanges are only reputable until they are hacked themselves.
Whilst the bear market has caused many individuals to lose money, it has also meant many businesses in the space have also been leaking funds. Bitmain is under threat and ConsenSys has had to reduce their workforce by around 10%. Exchanges, in particular small ones, perhaps do not have the same amount of funds to keep users’ coins safe as they once did in a bull run.
What makes this all the more frustrating is that storing your coins on anywhere other than an exchange is relatively simple for the majority of coins. Both Trezor and Ledger provide hardware wallets that can keep your coins safe, and you can also download desktop wallets that are safer than keeping coins on an exchange. If you are incapable of doing either of these things, perhaps you should avoid buying any cryptocurrencies until you learn.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.