For a while now I have moved all (the little amounts) of Cryptocurrencies I still had from exchanges.
I was afraid that with the rise of crypto this year exchanges would have a tough time handling all the new traffic. That was my reasoning.
And although the amount wasn't huge (around $1000) I still didn't feel like losing it.
Note: Everything under here are my personal thoughts.
You have to realize that when you send crypto to an exchange that crypto is no longer yours. You no longer own it.
What you get in return for sending your crypto to an exchange is an entry in the ledger of the exchange.
This is why it's so easy to exchange BTC to LTC and from LTC to MONERO and from MONERO to STEEM on an exchange. They are just ledger entries that change.
It's not crypto moving from wallet to wallet. That would take way too long.
You are trading on the presumption that they actually own the crypto you are trading. But of this, you can't be sure.
The moment you take you crypto out of the exchange to a private wallet of which you own all the keys it's yours again. You control it.
In a sense, I guess it could be like fractional banking. As long as if only a certain percentage of the users take their crypto out everything will keep running. If all the users request their crypto back, they might not have it.
Getting used to an exchange
Getting used to the existence of an exchange is very dangerous. Years and years of trading on the same exchange will make you trust an exchange and you forget about the risks.
BTC-E is such an exchange, it's been around since 2011. But one morning you wake up. And this is what you see:
It would instantly make me nervous. Especially when you read this:
"BTC-e ceased operation on 25 July 2017, following the arrest of BTC-e administrator Alexander Vinnik." - Wikipedia
I'm not saying BTC-E is over. It might very well come back but if it doesn't, your crypto is now gone. All of it.
Poloniex
I asked someone from the Steem marketing team yesterday if they could give me any information about the situation over at Poloniex. You can't deposit or withdrawal STEEM there. (and it's not the only coin)
I was told they make it as easy as they can for exchanges to communicated with the Steem blockchain. But it's tough for exchanges to maintain all the nodes for all the different coins.
That might very well be true but for me, it's enough to get nervous. Because it USED to work just fine.
Remember that all you own on Poloniex is ledger entries. What you think you might have on there might not be what they actually have. (this thought is always in the back of my mind).
I, therefore, would suggest changing the ledger entries of the coins you can't withdraw to ledger entries of coins you can withdrawal and get them out for now.
For me, the situation at Poloniex right now doesn't feel right.
Better safe than sorry.
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