Before the invention of Blockchain Technology, there were only a few ways to store valuable assets. You could either purchase a safe to keep your valuables there such as jewelry, banknotes, and gold, or go for a bank to do it for you. The modern banking system only works if depositors leave their funds in their bank accounts. It is the most appropriate and until recently the most secure way to keep your assets.
What do you get in return for leaving your money at the bank? You received almost zero percent interest rate on your deposits and you have to pay fees to do pretty much everything, all the while mortgage rates are at 3-4% in the US. Not confined to only that, credit card companies are also charging a twenty percent interest rate if you don’t pay the full balance at the end of the month. More interestingly people think it’s completely normal because it’s all they ever knew but now there is a need for some change.
Exchanges As The Weakest Link
The interesting fact about cryptocurrencies is that even though you still need to go through a centralized exchange. For now, to purchase crypto, you don’t have to leave them there once you've bought them, you can withdraw them to your own wallet. Exchanges have been the weakest link of the whole cryptocurrency ecosystem. They are well known for being prone to hack. The biggest hack happened in 2013-2104 when more than 750,000 bitcoins of the customer were stolen. Generally, these hacks are developing the greatest misunderstanding between bitcoin and cryptocurrencies.
So, let’s set the record straight that the bitcoin blockchain itself has never been hacked and no existing technology can hack it. The issue for many people is that the mechanics of the banking system are so ingrained in their mind they don’t understand that with cryptocurrencies you do not need a third party to hold your funds, you can do it yourself.
Get Your Coins In A Secure Wallet
When you leave your coins on an exchange, you do not actually own them, you have an "I owe you" from the exchange for the number of coins you have there. The exchange owns them on your behalf. This means that once again you are back to the old system where you have to trust a third party with your money.
The most secure approach to store your coins is really to store them in your own wallet like XANA Wallet. It appears as a multi-cryptocurrency wallet can be created here, where you will have your public key (to get coins) and a private key (to send coins). There are additional hardware wallets to store crypto. At the point when you send your coins to one of these kinds of wallets, you store them in "cold storage," implying that you store them offline. You don't really store any coin there - they are still on the Blockchain - yet you store your private keys. The hardware wallet alternative is safer as you never need to show your private keys; they are encrypted on the device and they are possibly used to sign transactions when required - when you need to send your coins. Wallet offers a secure way to store your digital assets without relying on a third party.
Summing Up
The excellence of controlling your own private keys is that while exchanges can be hacked or closed somewhere by governments and your advantages and financial balances seized or frozen, no one can touch your coins. There is no chance this can happen on the off chance if you take precautions. I as of now hear some of you murmuring "tax evasion" or "bypass capital control." While this is conceivable with certain digital forms of money (Bitcoin is mismatched for that as all exchanges are recognizable), they offer a degree of security of your riches that was incomprehensible until Blockchain innovation was developed. Go ask the individuals holding up in line in Zimbabwe to get their deposits out of the banks what they would think about not depending on a bank to hold their assets...
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