Getting funds out of centralized exchanges is the normal action, not an exception.
It is not wise holding Bitcoin Cash in CEXs (centralized exchanges) for various reasons. Exchange CEOs like to represent their platforms as SAFU, although history suggests otherwise.
Top cryptocurrency exchanges may have a system to secure their cold wallets, however, there are always loopholes. Hackers can exploit every exchange when they find support from an insider.
But hacking is not the only reason an exchange is a threat to our funds. Exchanges for no apparent reason may suspend withdrawals, ask for more KYC papers, and occasionally freeze balances while questioning the legitimacy of the funds.
Crypto is not about exchanges. This is just a marketplace, where we can exchange our inflating fiat and invest in the future digital economy.
Funds are not SAFU
This funny video by legendary Bizonacci explains exactly how users of centralized exchanges feel, almost every time they use them. The request to trust CZ, Jesse Powell, Brian Armstrong, any other CEO of a centralized exchange, and all the individuals working for them, having access to our funds, is just too much to ask.
Since the first Bitcoin exchanges appeared they became targets of hacking attacks and theft. Mt Gox had been hacked multiple times since 2011 and until 2014 when it announced it had lost about 800,000 BTC.
Other exchanges since the beginning have almost all suffered from hacks. Bitcoinica, Bitfinex, Binance, Shapeshift have all been affected by the hacking. South Korean and Japanese exchanges were also under extreme threat and various attacks extracted billions of USD in cryptocurrency form.
Hacks brought down multiple exchanges with some still in the liquidation process, and the customers unable to recover even a part of the funds lost.
Exchanges such as Cryptopia, Livecoin, Bitgrail, Altilly, etc, all claimed they got hacked, and some of them completely disappeared and didn’t refund any user. Another example is the Quadrica exchange, with an interesting case of the supposed death of its founder, taking the private keys and, subsequently, all the funds from the exchange with him in the afterlife.
Binance was also hacked, and while the announcement was about a relatively small amount, the CEO of the exchange, Changpeng Zhao (CZ_Binance) reacted oddly, reaching out to Jihan Wu and asking for options to attack the BTC blockchain, re-org blocks, and return the stolen BTC. This would require a combined effort by various mining pools and Bitmain back in 2019 was in control of about 40% of the BTC blockchain hash rate. It was possible, however, Jihan Wu explained the long-term implications and the reasons the pursuit of such a measure would not end well for the BTC blockchain.
It is no news that Binance suspended BCH and Monero withdrawals for one day. Other exchanges do the same, and I feel less safe when transferring in or out of an exchange than using a non-custodial wallet. I don’t trust any of the Centralized exchanges. You may love Binance, Kraken, and Coinbase, but they all have had their fair share of leaks and hacks.
Kraken has had its private database hacked and all names, addresses, phone numbers, etc., leaked. The same happened about two years ago with Ledger, and scammers started personalized phishing attempts targeting Ledger users.
Do we trust the anons working at Binance more than the anons in SmartBCH? This is serious since scammers can try to find ways to cheat but probably SmartBCH projects will keep rising even above our current expectations.
I prefer investing in tokens inside the SmartBCH ecosystem, rather than handing out my BCH to Binance and not being allowed to withdraw any time I request this. However, this is my opinion, maybe for some Binance fits their needs and feel safer with someone else in control of the funds.
Scam projects can appear on every blockchain. I've read lately how some blame the SmartBCH network about a million-dollar scam called Beach Swap which rug pulled and went offline.
This has nothing to do with SmartBCH, though. Ethereum, Polygon, BSC, all had hundreds of scams just this year alone that are reaching billions of dollars.
Understanding the technology requires research. The use of technology for scam purposes doesn't make the technology weak. Maybe a bug in the code or an exploit can damage software irreversibly, however, in SmartBCH, some of the most intelligent developers work and deliver a working and secure product. Any scam token is irrelevant to blockchain technology.
Think of all the dangers and risks you are undertaking by "trusting" intermediaries with your funds and private information.
Withdrawal from exchanges into non-custodial wallets where we control the private keys or recovery phrase is critical for any cryptocurrency user.
As a secondary move, a Bitcoin Cash investor can use SmartBCH after research and after finding enough potential in some projects. I write often about SmartBCH and advocate various projects while trying to perform due diligence and research first.
Lead Image Source: Pixabay
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I wish that electroncash allows the option to add the smartBCH so that we can easily move the money in and out and even cross cash transfer with swaps in future. I may have to spend some time getting into the smartBCH DEX and DeFis.