I’ve been around crypto since before exchanges with tokens existed. I wouldn’t trust any of these new exchanges with a single penny.

FTX has shown that the BTC, ETH, etc you think you bought with them is simply stolen from you. They took your money and bought their own vaporware tokens instead. It’s obvious with FTX now, but other exchanges are still doing similar things to you still.

A physical analogy: Imagine storing your physical gold in a bank which has a built in tunnel going from the vault to the bank managers house. And rather than a pile of gold in a vault there is a cardboard cutout with a picture that says “your gold here”. They super pinky promise they don’t use that tunnel ever though and it’s just for safety purposes.

But somehow, the bankman seems to be handing out gold like hotcakes from their house. There’s some cover story of he’s a successful trader or exchanger or something… but they give gold out to friends and use it to invest in businesses that somehow wildly also become instant successes… despite being seemingly obvious copies of other companies and providing no real innovation. In fact it’s such a good situation that this bank will even give you a great deal for depositing your gold in their bank. Your cardboard cutoff will grow at some unsustainable rate and you’ll feel rich.

Would you be comfortable using this bank to hold your gold?

A token is an extreme conflict of interest for any exchange. It’s the tunnel to the bankman’s house. They may tell you they aren’t using it… but why is gold overflowing from their house?

And you say, “Look how rich the guy is! He must be trustworthy.” Well he got that money by taking it from you, whether you know it or not. It’s not like he’s some great cryptocurrency innovator. A lot of these guys don’t even understand the very basic value prop of crypto and try to propose things like rolling back transactions on the bitcoin blockchain. Just absurd.

Frankly, looking at all the exchange token gains over the last bull run makes me sick. Not just because of the FTX style collapses, but to think of all the gains being directly taken away from good projects in the space and all of us investors, and being given to vaporware and frauds. Not to mention the fact that once people buy into these tokens they become shills for the fraud. Never underestimate the blinders that making money will put on you.

We have to do a better job of educating ourselves and each other about this type of thing for the space to succeed.

1) Best is to hold your own keys. If you hold the keys then the bankman’s don’t.

2) This is essentially holding your own keys but I’ll remind people DEX’s exist and you should use them.

3) Third best is to use an old centralized exchange that’s been around since before 2017-18 and is just an exchange. It doesn’t have a token and isn’t involved with FTX or similar behaviors like trying to be a hedge fund or trading firm or blockchain.

Good luck out there kiddos.

submitted by /u/RickandMowgli
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