Be very careful while keeping funds on Exchanges

Most of the centralized exchanges are high risk when it comes to keeping funds there. I understand that some exchanges are trustable and just because they have a decent reputation, they will not go against their policies. But there are some exchanges that don't do justice to their users. Some incidents came out really bad during this Luna event that happened recently.

During the Luna event, it appears that some exchanges locked the users from buying or selling Luna. The users did not even have access to their funds. Even though they knew they can sell their funds off when the market was going down and book their profits, there was no option available because their funds were locked. In some of the exchanges, the token balance was not even visible to the users. This is even worse. When exchanges delisted the coin, they also removed the balance from the users as well. This made people lose a lot of money.

Source

Playing around with the customer funds is against ethics but somewhere they might have a policy written that would prevent users from questioning them. The safest coin storage would be your wallet and not your exchange wallet. If you keep the money in an exchange wallet, the funds are not yours and you no longer have control over the funds. Initially, it might look like you have control over your funds just because you have the username and password with you but technically they can do whatever they want with your funds.

When it comes to decentralization, if we keep using centralized exchanges like these, we will always have the problem of centralization and governance here. But there are not many decentralized options yet. The world has to evolve a little more to be able to provide some concrete decentralized options. Some exchanges call themselves DEX because it looks like a neat fancy word in the decentralized world but actually they may not be that decentralized. There will still be someone having keys to your locker. But we cannot live without these exchanges yet.

Ultimately we don't have any other option than using the exchanges for our fund transfers and needs. But we can definitely do something. We can make use of the on-chain staking rewards option and move the funds to the on-chain in most cases. We can make use of the exchanges only for trading and transferring funds. I'm saying this to not go against exchanges but for the safety of users. There were a few exchanges that have done in-justice. Steem to Hive transition also had such incidental records about exchanges powering up customer funds to vote for puppet witnesses. History has it written in the blockchain which cannot be destroyed.

If you like what I'm doing on Hive, you can vote me as a witness with the links below.

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