As we leave June behind, we witnessed the worst quarter in a decade for Bitcoin price. Bitcoin lost around %58 of its value in three months and still facing a downtrend. Since the Luna crash in May, there is still a strong meltdown in the market cap because of the platforms that are at risk of default. By the time of writing, 3AC (Three Arrow Capital) had filed for bankruptcy in New York. Celsius Network still doesn't let users withdraw their funds and work on solutions to prevent bankruptcy.
The question is, how safe your Bitcoin is on an exchange? Celsius Network has raised more than $800 Million in funding rounds and has become one of the biggest leaders in the crypto lending market. No one would ever guess that we could witness Celsius being at a defaulting risk, but a day in crypto is like a year. If you can't trust one of the market's major players, who else can you trust?
Using platforms are very easy to use and have a simple user interface to navigate and manage funds. You can easily transfer, send, receive, and trade funds on an exchange platform. If you are a beginner, it is best to start with an exchange platform to buy your first coins. Exchanges and platforms serve the market and do a great job in crypto adoption for the masses. But it is not the best to hold all your assets on a platform, especially if you are a long-term hodler.
When you store your Bitcoin and other crypto assets on an exchange, you are leaving them in the platform's custody. In our Custodial and non-custodial wallets article, we tried to help you understand the differences between holding crypto assets in a non-custodial wallet or holding them on a custodial (on an exchange).
When you hold your coins on an exchange, it means they are under the platform's custody, and the platform may use them to generate rewards without asking your permission. If you are using a platform to store your coins, you can easily check if the platform is using your coins or not. You can simply look up your Bitcoin receiving address on Bitcoin Lookup website. You will see that whenever you receive some funds, they are automatically sent to another wallet. So your wallet is always with zero balance.
If you are a hodler, storing your coins on a non-custodial wallet is best because the more coins platforms have access to, the more leveraged the market is. The platforms are using customers' funds to lend to traders. This causes a massive increase in supply. You think you have one Bitcoin in your wallet, but someone is actually using that one to buy or sell more assets on a trading platform. Your Bitcoin can be used to take a short position, and it causes the Bitcoin price to go lower. In the worst-case scenario, you might lose all your coins if the platform goes bankrupt.
The famous expression is all about holding your coins in a non-custodial wallet to prevent the extended supply of Bitcoin. By doing so, you have complete control over your funds and serve the mean of Bitcoin's deflationary purpose. When you store your coins in a non-custodial wallet, you can look up your address, and you will see that the amount you own is always staying in your wallet. Noone can transfer or touch them without your permission. There are two types of self-custodial wallets; Hot wallets and cold wallets.
Creating an app wallet is very simple. They are called hot wallets. You can create a wallet by yourself on your mobile phone, on your desktop, or laptop. Exodus Wallet is a great choice for beginners, and Electrumis a good open-source Bitcoin-only wallet you can install on your computer. Blue Wallet is a very secure and user-friendly Bitcoin wallet you can use on your mobile phone. MetaMask, Coinbase Wallet, and Trust Wallet are other popular self-custody hot wallets.
Cold wallets are hardware wallets for crypto-asset storage. It is a device that is specifically manufactured and designed to host a crypto wallet. Crypto hardware wallets are the safest solution for long-term hodlers and big amounts. You can visit our Wallets page to learn more about different products on the market and their features.
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