At SBL, we tout cryptocurrency pretty hard. We’re gamblers, after all, and crypto is a major draw for folks like us.
It’s akin to the stock market, only without the artifice and regulatory hemorrhoids. Nobody wants fees and middlemen bleeding cash from their bottom line.
Of course, that doesn’t mean crypto investment doesn’t come without its risks. Just as with sports betting, crypto betting could go either way.
However, it’s important not to misattribute that risk.
That is, the coins themselves aren’t really “risky.”
Sure, they’ll go up or down. You could lose your shirt or win a private island.
But that’s the draw, isn’t it?
That’s the acceptable risk.
With crypto, the thing you have to pay attention to is the unacceptable risk – the added risk you take on when you could have mitigated it simply by changing your logistical approach.
With crypto, the biggest risks are the exchanges, not the coins.
And while you need these exchanges to get the coins, that’s all you need them for. If you use them for anything beyond that, you’re incurring more risk than you must, and for no functional benefit.
Again, think of it like sports betting: The wagers themselves aren’t risky beyond their reasonable risks. You either win or you lose. It’s very straightforward. That’s the allure.
But if you place your bets with an untested or untrustworthy online sportsbook instead of a long-lived and recognized legal sports betting site, that’s a risk.
Because there, even when you win, you might still lose.
It doesn’t matter how many of your bets hit if your book doesn’t use best-in-class security. It doesn’t matter how fat your stack gets if your book simply refuses to pay out your winnings.
And the above can be applied apples-to-apples to the crypto market.
Case in point, Exhibit A.
Here, a Japanese crypto exchange called Liquid Global got hacked, and as much as $90 million in Bitcoin, Ethereum, Ripple, Tron, and various other assets was stolen.
Meanwhile, Liquid’s exchange is down, with all trading and transfers suspended.
This is nothing new, of course.
While crypto itself is quantum-hacking-resistant, exchange-based “hot wallets” – i.e. crypto wallets with persistent, constant network connections – are not.
That’s because exchanges store the keys for your account somewhere, and that somewhere is hackable.
The solution to this – as we’ve advocated often – is to get your crypto off the exchanges ASAP.
When you store your assets in a private software or hardware wallet, you have sole access to those keys, and your wallet instances are a part of the asset’s actual blockchain.
Even for active day traders, it’s better – and nearly as convenient – to use private crypto wallets instead of exchange wallets.
Case in furtherance of point, Exhibit B.
Here, Binance – one of the biggest crypto exchanges in the world – is being sued by a small group of about 700 investors for suspending accounts and thus causing said investors to lose timely access to their crypto funds.
While the suit may have merit, the allegations don’t seem all that damning.
Last year, Binance issued a statement to US residents (and those in various other countries) that their accounts would no longer be accessible due to regulatory KYC (Know Your Customer) considerations.
We had assets on Binance ourselves, and we ran into the same issue.
However, Binance instructed us to use their regional exchange – for us, that’s Binance US – to reestablish our accounts and transfer our assets over.
We did so, but we then had to use a VPN to log back into Binance’s central exchange in order to initiate the transfers of our trapped holdings to Binance US.
Sure, the exchange could have done that for us, but after about an hour of headaches, we were whole again.
Granted, VPNs might not be common knowledge for the masses (it should be), and that can cause some issues, but it’s unlikely these litigants have exhausted their avenues or that Binance truly acted in bad faith.
Regardless, Binance was effectively down for these users, and that cost them something of value.
Of course, no exchange or online service can guarantee 100% uptime, so it’s hard to knock Binance for that.
Still, the takeaway is the same for both cases above, and this applies equally to crypto trading and crypto betting:
Get your coins off the exchanges because exchanges can be vulnerable.
Yes, that means you’ll have to jump through some hoops, set up your wallets, and make damn sure you never lose your wallet recovery phrases, but it’s a small price to pay for the incredible opportunities that crypto presents.
When you bet online – whether that’s on sports or casino games or crypto itself – you’re already taking a risk.
There’s no reason to add to that risk by intentionally ignoring basic best practices.
So hodl the line, and then bet on it!
