We all know that Exchanges carry a risk if we keep our crypto inside them. There have been instances in the past where some exchanges have run away with customer funds or exchanges getting hacked etc. We cannot predict such events and in most of cases if something like that happens, exchanges might say sorry but it can be hard to recover our funds. That is why it is continuously said not to have bigger amounts in exchanges and to move most of the long-term bigger holdings to respective wallets.
There are a few reasons why people continue to keep their funds in exchange. One good example is that there are some attractive features provided by the exchanges that give some returns for holding our coins in exchanges. These investment opportunities are sometimes unique to exchanges which we may not get if we keep our funds in our wallets. Let's see other reasons why people keep their funds in exchanges.
Quantity is low
If the quantity is very low, people usually don't care much if they lose their funds. That's one of the reasons why people think about keeping their funds in exchanges. If the amount is not very huge, I would say that it is okay to keep it in exchanges. I have also done that. I don't move my funds unless it is a big value. Otherwise, I keep the funds in exchanges and make use of the other benefits that exchanges offer to us.
Ready to lose the funds
Some people don't care about their funds. Despite saying multiple times about the safety of the funds, some people still want to take a chance and they are ready to lose their funds. That's another big reason why people keep their funds in exchanges. Luckily it may not be the case but sometimes we cannot predict what can happen. There have been instances in the past where even popular exchanges got hacked and so nothing can be predicted. If people are ready to lose their funds, then we cannot help it.
Need it for frequent trading
Traders usually have their funds on exchanges. To do frequent trading, it is very important to keep the funds in exchanges and also inside the trading wallet. That's when we can immediately make use of the ups and downs we have in the market. For someone who plays a lot in the market in the form of trading, they either don't care about the funds or they use a small value to trade which is okay for them.
Only for temporary needs
Sometimes people might have some transactions to make and they might have to wait a few days to do some transactions. Those are the few days when they keep a lot of money inside their exchange wallets. This can be a temporary need but we still cannot predict when bad things can happen. It is always good to be careful and avoid such scenarios in which things can go wrong.
After we understand all the above points, we should also be very clear that it is not a sin to keep our funds in the exchanges, the point here is that we have to understand the risks associated with keeping the funds in exchanges. Compared to exchanges the wallets are good but for different people the needs can be different.
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