Here's Why You Shouldn't Leave Your Cryptocurrency In An Exchange

The last thing anyone wants is to somehow lose their cryptocurrency when it could be prevented. This can happen through crypto being stolen while left in an exchange; such a loss could be potentially costly, and you may never see the digital money again. The truth is that although exchanges often present themselves as secure and safe, many of them are not. They can be unpredictable, and losing your crypto isn't the sort of thing you'd want to leave up to chance.

There are a number of reasons why exchanges can be risky places to leave cryptocurrency. The biggest of them all is that exchanges are huge targets for cyber attacks. If successful, hackers have access to a huge amount of money, making it well worth their while. You don't want your crypto to be subject to these sorts of attacks. Poorly secured exchanges with vulnerabilities on their end can lead to greater chances of your crypto being stolen.

As exchanges are big targets for hackers, security measures need to be strong and without vulnerabilities. However, there's unlikely to be a perfect exchange without these potential security risks, as hackers become more sophisticated in their techniques. They're motivated to be, too, since the reward is so massive, as noted by CoinDesk. There are security measures some exchanges use to protect your cryptocurrency, but they're not perfect.

One of these measures is two-factor authentication (2FA). This prevents someone from stealing your crypto even if they have your password. While this is necessary for protecting your account, it doesn't guarantee that your coins will be safe. If there are exploitable vulnerabilities on the server side of things, someone looking to steal your crypto could potentially bypass 2FA altogether, as explained by Forbes.

Another method that increases security is cold storage. This means that the exchange stores most of your crypto offline, making it harder for someone to get ahold of it. If an exchange offers this through its service, that's a good sign. Even in cold storage, though, it's not out of the clear yet. As you use cold storage, information about that usage, which is stored online, can point hackers in the right direction for gaining access. Despite these methods for keeping crypto safe, no exchange is perfect, and that's why it's unwise to store most or all of your assets on these platforms.