Of course, both have their pros and cons, but we need to evaluate whether the benefits we get from storing bitcoin on centralized exchanges are worth the trade-off. I mean, with services like staking, lending...as you mentioned, and how much percentage will we get from that each month? 1% or 2% per month and is that worth the trade-off because we risk losing 100% of our assets? Meanwhile, storing bitcoins in a cold wallet will not generate passive income but in the long run can generate 100% or 1000% profit and your assets are also safer. Which do you think would be a better choice?
By lending your money to third party platforms you be making something between 4%-8% yearly, what gives an inferior monthly margin to 1%... Compared to the risks of losing 100% of your funds it definitely doesn't worth. It's better to keep your money safe in a cold wallet.
Since there are no guarantees when investing in such platforms, this comparison is the final proof we need to reach the accurate conclusion of which storage method should be adopted: hardware wallets.
Even the legalized businesses aren't safe to invest your funds, as we saw in 2022 the scandals involving Celsius and FTX. Regards Celsius, investors were able to recover about 33% of their funds, but it's still a big loss after all. The interest generated until the scam happened just doesn't cover the losses faced by investors.
When we choose letting our money deposited at such websites we are aware about the high risks involved, therefore we shouldn't deposit all our money there, neither amounts of money we can't afford to lose.
In my opinion, unless we are day traders then we have no choice but to use and even store our funds on exchanges. For long-term holders, we should not just regret a few percent and face the risk of losing 100% of our capital when storing money on exchanges.
Cold wallets are not guaranteed to give us absolute safety because it depends on how we use them, but they are clearly many times safer than exchanges. Furthermore, don't forget our goal when entering this market is that in addition to making profits, we are tired of having to depend on banks to store our assets. So don't let yourself fall into that tired situation anymore by placing your trust in the exchanges.
