Security breaches and hacking often highlight the risks of storing Bitcoin (BTC) on a central exchange. An analyst said that keeping BTC on the exchange rate could lead to a rise in prices.
Rufus Kamaw, a research and market analyst at Scop Markets Kenya, explains why keeping the BTC in currency will reduce the value of the coin. Kamau believes that buying BTC in exchanges is the same as buying “I owe” or “IOU”, which he described as “paper bitcoin”.
If you bought Bitcoin with the exchange, you are buying Bitcoin, the moment the IOU decides to transfer your Bitcoin out of your currency.
This explains the high exit fees.
2 / n
– RufasKe @ (@RufasKe) May 8, 2022
Analysts also point out that exchanges create many ways to encourage BTC withdrawals, such as higher withdrawals. On the other hand, it encourages BTC to stay in the exchange by providing exchange services.
According to Kamau, this is because the exchanges sell the Bitcoin they hold to other buyers, and the IOU owner remains happy with the BTC’s annual percentage yield.
Kamau: As a result of this process, investors who keep exchanging BTC will suffer because the exchange will allow Bitcoin to be “published” – and as the supply increases, the price will decrease. “If you want to change the world with Bitcoin, you have to do it,” he said, urging users to keep their content private.
Similarly, Twitter user BTCSchellingPt has sent a warning to people not to withdraw crypto. According to Coinbase, in the event of a downturn, users’ coins will become the property of the exchange.
They only posted a loss of $ 400 million
– WizardofAus ⚡ ⚡ (@BTCSchellingPt) May 11, 2022
Many tags liked the Kamau thread on Twitter and tweeted again, but not everyone agreed with the comments. Twitter user Koning_Marc They repliedHe called the accusation “the best wild hypothesis.” In addition, Twitter user Felipe Ininas He replied If that were the case, the exchanges could be shortened without BTC, which is “impossible.”
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Crypto exchanges do not deny that this can happen on some exchanges. However, LBank chairman Eric Hee told Cointelegraph: The exchanges are instructive. He explained.
“The market teaches consumers how to sell bitcoin because they cannot buy bitcoin back. Such exchanges will certainly fail.
He also described the growing and expanding digital asset exchanges as “firm cryptocurrency believers” who believe that BTC could reach $ 100,000 and have bought more than ambiguous things instead of selling other people’s coins.
Binance also weighed in on the matter. In a statement, Binance spokesman told Cointelegraph that exchanges were not allowed to move their users’ money without permission. In Binance, the company said it would not take up space and that “users’ crypto assets would be stored securely in offline storage.”