Beware of crypto exchanges! Learn how to use them with the necessary precautions

The cryptocurrency exchanges, platforms where these digital assets can be bought and sold, are massively used. Usually centralized ones are usually used, although decentralized ones also exist.

Although they can be very useful, it is necessary to know what the risks inherent to this type of platforms are before using them and to know how to prevent possible inconveniences.

The exchanges provide certain confidence when buying or selling cryptocurrencies, since although one can do it outside this type of platforms, the truth is that one needs to trust the good faith of the seller or buyer.

Regarding the risks, cryptocurrency expert Luis Rodriguez explained in Cripto VOZ, the cryptocurrency podcast of VOZ, that you have to take into account whether you are dealing with a legal centralized exchange or one that operates outside the law.

Regarding the unregulated platforms, there is a risk that the people operating them will abscond with the money, and as for the legal ones, the user is subject to certain arbitrariness of the authorities, such as freezing of accounts, bans, etc.

"The important thing is to be aware of the method one is using to trade," Rodriguez said.

In the case of the centralized exchanges, the expert recommended using them to make a transaction and withdraw the funds to a personal portfolio, unless one seeks to do trading (buying and selling financial assets for profit), for which it may be necessary to risk leaving more money on these platforms.

It should be clarified that in these centralized exchanges it is necessary to provide personal data.

Decentralized exchanges

The expert also referred to the decentralized exchanges, i.e., each user has custody of his cryptocurrencies, connects to the platform and executes at the time the operation he wants.

"That means you don't have all your coins deposited in one platform," Rodriguez pointed out.

However, he clarified that these types of exchanges are not risk-free either.

"They all have risk, the important thing is to know what it is," he maintained.

It should also be kept in mind that on all platforms there are other risks: hackings or mismanagement that can lead to various inconveniences, such as insolvency in exchanges centralized ones or smart contracts that "are not honest" in decentralized ones.

What precautions to take

Rodriguez stated that it is necessary to "be attentive to the news and what other people say about a platform."

However, he argued that it is even necessary to be cautious with the most popular exchanges, which is why he opposes the idea that a platform is "too big to fail." In fact, he indicated that some that were considered popular have collapsed and become insolvent.