Step 3: Benefits of Blockchain Wallets

Why not to store your ADA on an exchange

While it may seem convenient to store your cryptocurrency on an exchange, there are several risks associated with doing so.

Firstly, exchanges are centralized and can be vulnerable to hacking attacks or security breaches. If an exchange is hacked, your funds may be at risk of theft or loss.

Second, exchanges aren't always clear about how they work, which can make it hard to trust and rely on them. Exchanges may sometimes do things that are unethical or illegal, like insider trading or manipulating the market.

Lastly, exchanges might not always provide the same level of security as wallets. By storing your ADA on an exchange, you are basically putting your money in the hands of the exchange and trusting it to keep it safe.

Because of these things, it is highly recommended that you keep your cryptocurrency in a personal wallet that you control. This will give you more control over your money and lower the risks of keeping it on a central platform.

Risk list:

• Risk of hacking: Centralized exchanges are vulnerable to hacking and other types of cyber attacks.

• Risk of exchange insolvency: Centralized exchanges are centralized, meaning that they are controlled by a single entity that can go bankrupt, which can lead to a loss of funds.

• Risk of government intervention: Centralized exchanges are regulated by governments and can be subject to government intervention, which can lead to the freezing or seizing of users' assets.

• Risk of censorship: Centralized exchanges are centralized, meaning that they can be controlled by a single entity that can decide to delist certain coins or shut down the exchange altogether.

• The risk of regulations: Centralised exchanges are subject to rules, and they can be forced to follow rules that hurt users, like making them reveal their identities or freezing their money.