Why you shouldn't keep your money on an exchange.

What is an exchange?

For the readers who are not familiar, a cryptocurrency exchange is a trading platform on which cryptocurrencies can be bought or sold for typically both fiat money and other cryptocurrencies.

Why is keeping your money on an exchange not a good thing?

- Bankruptcy threat

Keeping your money on exchange is indeed very dangerous. First of all, many exchanges are privately owned by small companies. Cryptocurrency exchanges are very loosely regulated, and none of your money is insured by the FDIC or any other entity while kept there. In 2014, the bitcoin exchange Mt. Gox, which was at the time the largest bitcoin exchange in existence and handled 70% (yes, 70%!) of all bitcoin transactions, filed for bankruptcy. 

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Hundreds of millions of dollars of bitcoin were lost and the bitcoin world was devastated. This is a large danger of keeping your money on an exchange: it could go belly-up and file for bankruptcy pretty quickly and unexpectedly.

- DDOS/hacking threat

Exchanges are frequently getting DDOSed or hacked, and in the last few years, many major exchanges have been DDOSed or hacked. Most recently has been Poloniex, which has gone under multiple attacks recently, and has become unusable. Droves of users have complained about not being able to execute crucial trades on time or withdraw their money in a timely manner. The second that an exchange exhibits these types of problems due to a hack or DDOS attack, you are no longer in control of your money.

- Complete lack of control

Finally, and most importantly, you have no control over your money when it is on an exchange. When your money is sitting on an exchange, you are not in control of your money at all. Isn't the primary reason for the creation and popularity of bitcoin and other cryptocurrencies the fact that they give you the ability to be your own bank? Holding your money up on an exchange completely defeats the purpose of cryptocurrency, the ability to write down your private keys and lock them in a safe, knowing that nobody else can touch your money and you can access your money without having to go through any third-party. Instead, a third-party holds your hard-earned money in their wallet, and if something goes wrong, there is no private key you can use to recover your funds.

In conclusion, if you plan to hold cryptocurrency for the long haul, don't keep it in an exchange. Get a wallet, run your own node, LEARN about the network of the coin and more details of how it works. The entire purpose of cryptocurrency is to BE YOUR OWN BANK. Don't defeat that purpose by letting a third-party company hold onto your hard-earned money.