If you’re a long-term holder of a security or a cryptocurrency, you’re likely using an exchange, and there are some good reasons for doing so.
The main ones are: a) The security or cryptocurrency is widely available, and can be traded over the counter; b) The exchange is secure; and c) You’re getting paid for your security or the cryptocurrency, rather than selling it for a profit.
Here’s a look at the pros and cons of using each of those reasons.1.
The security: the value of a crypto depends on its intrinsic worth.
If you want to buy a security, you might be willing to pay a premium for its value, but if you want the security to trade for something more than what you paid, you may need to consider a third-party security, such as a trust or a company.
If the security is in your name, you have a way to verify its ownership.2.
The currency: If you use the same currency as the exchange, you can be certain that the security will trade for the same price.
If your currency is in volatile exchange rates, you’ll be more inclined to pay for the security at a discount.3.
The trust: If the trust is a reputable company, you know it has its own wallet, so you can check for any issues and fix them before the trade.4.
The company: The company has its wallet, and if you don’t want to trust it with your security, it can be as easy as checking the balance.5.
The bank: A bank or an investment bank might want to check your account before you sell, or you can ask the exchange to refund any money you pay for your trade.6.
The other party: If your other party is a third party, you should make sure the trade is not a scam or a fraud, and you should report it to the exchange.7.
The value: A security is usually worth more if it trades for something that is more valuable than it is worth.
This is especially true of cryptocurrency exchanges, where the exchange can be the only person who can sell the security, which increases its value.8.
The convenience: You can trade in your own name, and it’s possible to transfer your coins to another account without having to provide the other person with your password.9.
The risk: You’ll need to be extra cautious if you’re going to sell your security for a price below what you would have paid for it.
The downside is that you’ll likely be taking a loss on your investment, and in many cases, you won’t be able to sell the securities back to your original owner.10.
The upside: If a security you want is trading for something other than what it was sold for, the upside is even greater.
For example, if you buy a cryptocurrency on an exchange that is worth less than what was paid for, it’s much easier to buy the security and get the money back.