As the world of cryptocurrency continues to evolve, it becomes increasingly important to understand how to securely store digital assets. One of the most popular cryptocurrencies, Ether (ETH), is no exception. Traditional exchanges and online wallets are convenient for quick transactions, but long-term ETH holders should consider switching to self-custodial. This guide will explore the benefits of self-management and provide tips for safely storing your ETH for the long term.
Why self-management is important when storing ETH
Self-managing or storing your ETH in a wallet where you control the private key is a significant improvement over entrusting your funds to a central authority. One of the main concerns of using a centralized wallet is security: online exchanges and wallets are vulnerable to attacks, theft, and internal scams. Not only that, users are forced to trust the system with their own money. Self-monitoring eliminates these concerns by giving users full control over their assets.
Understanding the risks of centralized exchange wallets
Centralized exchange wallets pose some risk to users. One of the biggest risks is the possibility of being hacked, which has happened with various exchanges in the past. This could result in significant loss for affected users. Additionally, the exchange's control of the private keys means that users are forced to trust the exchange to keep their funds safe.
Centralized wallet providers can also freeze user funds or block transactions, which can significantly limit a user's control over their assets. For example, some exchanges have been known to suspend withdrawals during times of high volatility, which could prevent users from taking action to protect their assets.