Taking Your Coins off Exchanges

From the desk of Louis Sykes @haumicharts

One of the greatest features of Bitcoin and cryptocurrencies more broadly are the mechanisms that allow for self-custody.

In traditional assets like commodities and fiat, the only way to maintain self-custody of your assets is to inefficiently store them, which comes with a slew of security risks. Given the challenges of burying gold or stashing cash in a mattress, the overwhelming majority of people simply leave this daunting task to a financial intermediary.

The trouble in crypto, however, is the instability among even the most established of firms and institutions. Hacks, breaches, and insolvencies are incredibly commonplace in the world of digital assets. Even a handful of the largest protocols and lenders have gone under, and billions of funds have been lost in recent months.

And when it comes to exchanges -- one of the safer ways to store funds -- hacks have been common over the past few years.

You don't need to ask crypto native about the dangers of storing their crypto on exchanges. Mt Gox, which handled over 70% of all crypto trading in 2014, shut down after a hack led to the loss of 850,000 Bitcoins. In today's terms, this is equivalent to $17B worth of client funds vanishing.

Nowadays, exchanges are larger, more sophisticated, and safer organizations. This will only continue to be the case as insurance funds grow and the regulatory branch increases its involvement over the coming years.

But when it comes to safely storing Bitcoin and other crypto, there's another solution that avoids the necessity of a third party.

Enter the world of cold storage.