I think about crypto currency like an island in the middle of the sea. When you are out in the middle of the ocean there could be huge swells up and down, but you are safe in you little boat and ride up and down on them. You may get a little sea sick, but you are safe.
Likewise, when you are on land and away from the shore everything is steady, you aren’t sea sick any more and don’t have to worry about the ocean swallowing you up.
Where the danger lies is clsoe to shore, those swells that don’t bother you in the middle of the ocean all of a sudden rise up and crash against the rocks. You have to manouve carefully to find a safe harbour, but there are rocks, and cliffs all around. Then when you are on land, you have to get away from shore because you never know when one of those waves will swell up again and drag you back into the ocean, this time without the safety of your boat.
FIAT is the Ocean
FIAT is like the ocean, vast and moving all the time. Crypto is static, and secure. You don’t have to trust that it will be there, you just have to trust in the self interest of everyone participating. It’s at the edge of FIAT and Crypto that the danger lies.
It is impossible to tell what exchange is a safe harbour and what is a rocky shore. There will be brave people trying the waters and beaconing others, but unlike the shoreline, an exchange can go from a safe harbour to rocky in an instant. This is a failing of the lighthouse and the harbour.
The edges are scary
Exchanges live on the edge of the crypto space, and it is always best to transit through them and never stay long. Keep moving from the ocean to safe land (your own wallet), or vice-versa. Don’t store, don’t stay.
The other analogy I use for exchanges is the poker table. You would never leave your entire bankroll on the table to be lost with pocket aces, likewise you should never leave more value in an exchange that you can afford to lose.