Elon Musk Encourages People to Ditch Crypto Exchanges
His message was simple in mid November, ‘not your keys, not your crypto’. In other words, if you don’t own the keys associatd with your cryptocurrency… somebody else does. This can spell major trouble for people who don’t realize the crypto they have invested in isn’t actually theirs. Popular crypto exchange sites such as Binance and Robinhood have become popular choices for people who want to invest in crypto. These exchanges are especially appealing to people who don’t quite understand how the technology behind crypto actually works. However be warned, these exchanges are indeed convenient, but they can prevent users from harnessing the true potential of their crypto investments.
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Why Do Exchanges Do This?
Large cryptocurrency exchanges such as Binance and Robinhood have a lucrative method of making money off their users. They do so by holding the private keys associated with the crypto that users invest in, as well as the private keys to the wallets holding this crypto. In simpler terms, here’s what these large exchanges are doing. A user creates an account with a popular exchange such as Binance, but Binance does not actually offer the user any of the credentials associated with their investments. These credentials are exactly what distinguishes whether a cryptocurrency belongs to you or someone else. In other words, these exchanges own your crypto, and possibly your wallet as well (depending on the exchange). This is something to keep in mind if you plan on investing large amounts of money into cryptocurrency.
Can We Trust Crypto Exchanges?
Recently one of the largest crypto exchanges in the world has been under scrutiny. Binance, one of the largest crypto exchanges to date, is suspected of possible money laundering and currently faces investigation by the U.S Department of Justice. Exchanges such as Coinbase have recently experienced unexpected ‘shutdowns’ where users were unable to sell their cryptocurrency.
Is Elon Musk Correct?
It should be noted that Elon Musk is a person who does not have any personal interests in profiting from crypto holdings or exchanges. It is unlikely that Elon would waste his time spreading misinformation surrounding the validity of crypto exchanges. Perhaps this is a sign that we should seriously take into consideration that these large exchanges are essentially controlling large portions of crypto markets. This urgent warning from Elon should be enough to raise concerns, especially for people who currently own crypto through platforms such a Coinbase or Binance.
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