Why Silicon Valley Bank Was NOT Like FTX!!
Is your money safer in traditional finance or Crypto??!?!
Banks and crypto exchanges are two TOTALLY different types of financial institutions. While banks have been around for centuries and has regulations built out from years and years of existence, crypto exchanges are a relatively new addition to the financial landscape and we are currently watching regulations being made in the crypto space pretty much via “trial and error”.
However, despite their differences, both banks and crypto exchanges serve similar functions, namely, storing and transferring funds.
So, what are the differences between banks and crypto exchanges, and why are banks inherently safer? Let's take a closer look.
Firstly, banks are heavily regulated by government bodies, whereas crypto exchanges are not. This means that banks have to comply with a whole host of laws and regulations designed to protect consumers and ensure the stability of the financial system. Crypto exchanges, on the other hand, are largely unregulated, which means that there is no guarantee that your funds will be safe.
Now, you might be thinking, "But wait, I thought the whole point of cryptocurrency was that it was decentralized and unregulated!" Well, yes and no. While it's true that cryptocurrency was designed to be decentralized, the reality is that most people still use centralized exchanges to buy and sell cryptocurrencies. And unfortunately, many of these exchanges have been hacked or shut down, leaving users out of pocket.
Another key difference between banks and crypto exchanges is the level of security they offer. Banks typically have multiple layers of security in place, including firewalls, fraud detection systems, and 24/7 monitoring. They also have insurance policies that protect customers in the event of fraud or theft. That is why just a day or two after Silicon Valley Bank fell, those who banked with them were ensured that they would be able to access up to the $250K that the FDIC covers, with dividends/certificates for those over the $250K limit to try to make everyone whole. Whereas with FTX no one knew if they would ever see their money again the days following the collapse.
Crypto exchanges, often have much less robust security measures in place, and are more vulnerable to hacking and other cyber attacks.
Of course, there are some people who would argue that the very nature of cryptocurrency makes it inherently more secure than traditional banking. After all, cryptocurrency transactions are encrypted and recorded on a public ledger, which means that they can't be altered or deleted. However, while this may be true in theory, the reality is that many people have lost their funds due to human error (such as losing their private keys) or because of security breaches on the exchanges themselves.
In short, while crypto exchanges offer some exciting opportunities for investors and traders, they are inherently riskier than traditional banks. Banks have been around for centuries for a reason - they offer a tried-and-true way to store and transfer funds, and are heavily regulated to ensure the safety and stability of the financial system. So, if you're looking for a safe place to store your hard-earned cash, you can't go wrong with a good old-fashioned bank account (or Vanguard see the video below starting at 51:46 to see what Stock Analysts say is the safest place to put your money, safer than Crypto or the Stock Market!!).
There are still safe places to store your money other than under your couch!!!