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exchanges, volatility and risks  
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Author Topic: exchanges, volatility and risks  (Read 999 times)

devphp

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exchanges, volatility and risks
« on: July 08, 2014, 08:13:20 pm »

The more you keep your NXTs at exchanges and don't withdraw, the more chance exchanges can use your NXTs to create fake volumes, effectively trading against you. They know they can be sure that a certain number of users don't withdraw and they can do with those funds whatever they like. They can dump large amounts of NXTs and then buy them back at depressed prices, because people panic and sell into dumps.

Now, I don't claim certain exchanges do that, but with large enough reserves it's more than possible. Don't keep your NXTs at exchanges, withdraw, this will ensure less gut-wrenching volatility and more stable price growth. Exchanges will know that they have to meet their obligations and will be less inclined to act as fractional reserve banks.

Besides, your funds are at risk when you rely on third-party to keep your funds. Crypto currencies were designed such that people can act as their own bank. Well then, be your own bank, what are you waiting for?!
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devphp

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Re: exchanges, volatility and risks
« Reply #1 on: July 10, 2014, 09:28:54 am »

In the light of current events, I still think being your own bank is better than leaving coins at an exchange where a third-party does it for you. There are risks in both cases, but crypto currency enthusiasts should first of all rely on their own responsibility.

Besides, your exchange account can also be hacked into, thus, that's no guarantee your funds there are any safer, moreover, keeping your funds at an exchange opens a second risk of the exchange itself being compromised, so it's double risk than if you kept it all on your PC (or in your head as is the case with the brainwallet).
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Neomadra

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Re: exchanges, volatility and risks
« Reply #2 on: July 10, 2014, 09:49:28 am »

+1
It's very important to enlighten people about that.
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devphp

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Re: exchanges, volatility and risks
« Reply #3 on: July 14, 2014, 08:05:04 pm »

+1
It's very important to enlighten people about that.

I hope these efforts aren't in vain. Who wants to be goxxed?
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devphp

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Re: exchanges, volatility and risks
« Reply #4 on: August 17, 2014, 09:47:06 am »

I am going to update this thread every month to remind you guys to withdraw from exchanges to your own wallets. Memory is short, you might forget, I won't.
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farl4bit

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Re: exchanges, volatility and risks
« Reply #5 on: August 17, 2014, 10:37:08 am »

I always keep my NXT safe in wallets, but I keep some NXT on exchanges for occassionly trading. When a price spikes on an exchange and you want to sell, it takes to long to transfer NXT to an exchange. And you will miss the spike, I have experienced it a few times. That's why I have about 15k NXT on BTER for trading. How should I do it otherwise?
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devphp

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Re: exchanges, volatility and risks
« Reply #6 on: August 17, 2014, 10:41:42 am »

I always keep my NXT safe in wallets, but I keep some NXT on exchanges for occassionly trading. When a price spikes on an exchange and you want to sell, it takes to long to transfer NXT to an exchange. And you will miss the spike, I have experienced it a few times. That's why I have about 15k NXT on BTER for trading. How should I do it otherwise?

Well, is it profitable and covers losses from hacks? If it does, then I'd say, keep storing coins at the exchange. Personally, if I need to do a trade, I deposit and withdraw when the trade is done. Sure I might not catch the spike, but I don't like day trading anyway, when there is a good trend unfolding, it usually lasts weeks, there is plenty of time to buy low and sell high.
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