There's no universally accepted strategy to get ahead in the crypto industry. Any approach that you decide to go with must suit your personal requirements at the end of the day.
In virtually every crypto strategy, an exchange is often involved because it is a hub that you've assumed to be trusted enough to conduct business with other crypto traders.
Decentralised exchanges or simply Dexes are non-custodial, so you still have access to your assets that are onchain. In most cases, when an asset like Bitcoin, for example isn't on Hive blockchain, for example, a bridge, of sorts is built with a synthetic version of Bitcoin called Swap.Bitcoin is created in a 1:1 ratio.
Central exchanges, on the other hand, require you to physically send your crypto asset to a different wallet address and then trust them to credit your exchange wallet with the said crypto. In reality, the numbers you see on an exchange are just numbers and your assets there are only imaginary.
The crypto market has technically gone full circle, as the reliance on central exchanges continues to rise. Platforms that should be exclusively marketplaces have risen to the top of the pecking order, and pretty much control the fate of the industry as a whole.
I've always considered central exchanges to be banks of crypto. Ironically, crypto projects are striving for decentralisation but for some reason, we always fall back on Cexes.
Cexes are becoming more powerful
If we go back to the situation with Hive's fork from Steem, you will get an idea about how much power central exchanges wield. You will also notice that they're not exactly as neutral as they claim to be.
In fact, I believe that even if the cost comes as a disastrous market capitulation, exchanges will still prioritise themselves before concerning themselves with the well-being of their customers.
Central exchanges can virtue signal all they want with their eulogical sermons about how they're spreading the message of crypto to the world. In reality, they're self-serving pieces of machinery that prioritise lining their pockets over their customer's safety.
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Centralized institutions endanger the whole system. Binance, we all know what they did when it comes to Hive, but with Terra for example, they propped up a failed platform, an absolute failure of an idea for quick gains. People lots billions. On LUNA 2 they lost billions again. The power they have over markets is insane.
The biggest irony in everything is that Cexes basically gather resources from a diverse group of entities striving to create a decentralised economy, and lump them into a centralised scheme. It is, perhaps, the greatest irony of the crypto industry.
Cexes are for trading
Financial times gathers that a number of exchanges halted Bitcoin withdrawal. It was only temporary and carried out to "protect" customers from the wicked volatility.
In reality though, this is just fractional reserve banking at play. The imaginary crypto that you hold in exchanges doesn't actually belong to you anymore and in a cataclysmic event, most central exchanges won't return it to you because they're using it for something more profitable to them.
It would be disingenuous of me to say that exchanges don't have their use. However, I think that the idea of using them as your actual 'wallet" gives them more power than they should have.
I believe that exchanges should be treated only as marketplaces where you simply do your trade and then at the end of the day, you move your assets back to the blockchain.
Even if you must hold on an exchange, let it be a small portion of your portfolio, rather than your main wallet. Central exchanges are for trading and not for hodling.
