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Author Topic: Reminder: do not keep your money in online accounts  (Read 3396 times)
theymos (OP)
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November 15, 2022, 02:36:52 AM
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 #1

When you log into an exchange, yield platform, or other site, and it says that you have a balance of "1 BTC" or "1 USD", this does not actually mean that you have 1 BTC or 1 USD. Rather, it means that the company showing you this balance owes you that money. In other words, you've given a loan to the company. Maybe the company will pay you back, but history is littered with defunct companies which accepted deposits and were widely trusted for years, but which ended up not paying back their depositors in the end.

To the greatest extent possible, you should always avoid keeping BTC (or anything else) in online accounts. This is especially important right now because a very large exchange went bankrupt recently; this has already caused a contagion effect which has taken down other companies which accept deposits, and this contagion may continue to spread and affect more companies.

Ideally, you should keep as large a percentage as possible of your crypto assets in a wallet where only you control the private keys. Electrum for Android or desktops is one good option. For iOS, there's BlueWallet. If you have a large variety of different crypto assets that you need to store, there's Unstoppable wallet. If you have never used your own trustless wallet before, using a mobile app is probably safer than using a desktop app. An even safer option, which you should definitely consider if you have a lot of crypto assets, is to use a hardware wallet such as Trezor or Ledger.

Also, note that many altcoins, tokens, and DeFi projects are either fundamentally centralized and therefore about as risky as online wallets, or they are still potentially vulnerable to the recent wave of insolvencies due to the way that they're designed.

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