Pages:
Author

Topic: Centralized and kyc platforms can pose risks in the future (Read 454 times)

hero member
Activity: 2408
Merit: 614
Leading Crypto Sports Betting & Casino Platform
also do not fill in right information while buying hardware wallets.

Also to this effect for those promoting bounties, you need to be careful about how you provide kyc information about yourself. It is not compulsory to promote bounty that will require kyc (Know Your Customer). Many times the information and photograph you provide can be used for illicit dealings that you don't know about and in the future, you may have issues with your government when document is required to be presented but because your data information has already been used for scam or bad involvement, you may be denied certain things or benefit.
legendary
Activity: 2268
Merit: 18492
Maybe the main concern here was the legitimateness of a platform
...
It could easily be used in a crime but I guess you could still do it if there are platforms that you ready trust its security
There are no crypto platforms or exchanges anywhere I would trust with my KYC details. The small exchanges are obvious - their security is lax, and they often disappear or outright scam, taking your KYC data with them. But even the big exchanges cannot be trusted. Pretty much all of them use third parties to collect, process, and store, your KYC data, and you have no idea what security these third parties do or do not have, how securely your data is transferred, how securely it is stored, who can access it, and so forth. You also don't know how they share you information.

For example, Coinbase transfer your data to a number of companies, such as Jumio and Sift, as laid out here: https://www.coinbase.com/legal/privacy. Let's see how they handle your data:

Jumio also may subcontract the processing of your data to, or otherwise share your data with, its affiliates or third parties in the United States or countries other than your country of residence.  The data protection laws in these countries may be different from, and less stringent than, those in your country of residence.

We may share your information with third party vendors, contractors, consultants, and other service providers who provide data processing services to us and with whom the sharing of such information is necessary to undertake that work.

Your personal information may be transferred to, and processed by Sift in, countries other than the country in which you are resident, including the United States, Ukraine and other countries around the world where Sift, its affiliates, service providers or partners operate facilities. These countries may have data protection laws that are different to the laws of your country and may not provide for the same level of protection as your jurisdiction.

As soon as you hand over your data to Coinbase, it is transferred to a third party, who transfers it to more third parties around the world in a bunch of countries with who knows what data protection laws. It could end up in the hands of literally anyone on the planet, and often does. Every major exchange is the same. How anyone is OK with this I will never understand.
sr. member
Activity: 1596
Merit: 419
Maybe the main concern here was the legitimateness of a platform, asking for a KYC or being centralized was a big responsibility since they have big information of their users that could easily be used in other agendas.

There are a lot of people who hate centralization and definitely not willing to do KYC in a platform just for their services or maybe willing to chance the platform if it is asking for a KYC.

It could easily be used in a crime but I guess you could still do it if there are platforms that you ready trust its security, there are a lot of exchanges that get hacked even some big exchanges has a history of hacks so it's really a big risk giving your data to centralized platforms.
legendary
Activity: 2268
Merit: 18492
There is no way out of this mouse hole
There is, and it is to use decentralized exchanges.

Sure, they are not as fast to complete a trade (although they can be faster to actually get bitcoin or fiat in your hands once you consider the time it takes to actually deposit or withdraw fiat from a centralized exchange), and they user interface might not be as slick and shiny, but those are a small price to pay for not having to complete KYC, allow some complete strangers to monitor your financial activities and hand that information over to your government, and not risk your identity being sold or stolen in the future. Not to mention that you get to keep control of your coins during the trade and do not have to deposit them to a wallet controlled by someone else.

If you are keen to avoid KYC as you should be, then I would recommend taking a look at Bisq, Hodl Hodl, and LocalCryptos.
full member
Activity: 378
Merit: 135
On the other hand, they can become criminals themselves for kyc reasons, seizing your money arbitrarily or selling your identity to other criminals.
Knowing this why do we have to risk our information being sold on the black market. If the excbange is credible and do not sell, exchanges could also be hacked by cyber criminals. During the hack the database of all the customers are in the hackers possession. There is no way out of this mouse hole
hero member
Activity: 2002
Merit: 633
Your keys, your responsibility
I'm scared of identity theft so I keep my details and lifestyle away from social media. Now in order to buy Bitcoin from most exchanges I am subjected to provide my id card and documents for kyc. I really do not understand the whole point of kyc...is it actually fighting crime or enabling it?
KYC is like a 2 edged sword. I still doubt the function of kyc as a crime prevention. There are so many exchanges that still provide leeway for the minimum amount of top ups and withdrawals, meaning that there is a criminal loophole there. Actually, they are not fighting crime as you think, they're just obeying the law. On the other hand, they can become criminals themselves for kyc reasons, seizing your money arbitrarily or selling your identity to other criminals.
full member
Activity: 378
Merit: 135
I'm scared of identity theft so I keep my details and lifestyle away from social media. Now in order to buy Bitcoin from most exchanges I am subjected to provide my id card and documents for kyc. I really do not understand the whole point of kyc...is it actually fighting crime or enabling it?
legendary
Activity: 1386
Merit: 1111
...gambling responsibly. Do not be addicted.
i believe hardware wallets are a safe way of storing cryptocurrencies from the articles i have read about it, the question i have is what happens if this hardware wallet is stolen or is destroyed, does that mean that the cryptocurrencies on it are lost forever? or is there a way to recover them in the case that the hardware wallet is lost, damaged or stolen?
You have full control of your hardware wallet, if the coins stored on it are lost, you can get another hardware wallet to recovery your coins. This is the reason if you have your seed phrase and passphrase, your coins are not lost because the seed phrase and passphrase will generate you your keys needed to access your coins.

You can also use online BIP39 wallets because recommended hardware wallets are BIP39, you can import the seed phrase from lost hardware wallet on such online wallets but it is not safe like recovering it on offline wallets.
legendary
Activity: 2268
Merit: 18492
all KYC information that collected on a centralized exchange or a custodial wallet, they are on a separate database that highly encrypted and no one can steal on it unless if there's an inside job or the owner itself will sell that information of our personal data that has been collected.
Well, that's just not true at all. Every large exchange uses third parties to process and store your KYC data. Your data is transferred to these companies (sometimes several different ones) and you have no idea how securely it is transferred, how securely it is stored, or who has access to it. KYC data is frequently stolen without any sign of an inside job, even to the largest exchanges such as Binance, who were hacked for thousands of their users' information. And yes, a lot of exchanges or their associated third party processors have been caught selling data too.

It should have transparency of their team and as possible there's no hiding on a website owner.
Irrelevant. Knowing the people behind the site does not make your data any safer.
legendary
Activity: 2366
Merit: 1206
🔰Buy/Sell Cryptocurrencies🔰
In ny country, I used a centralized exchange and also a wallet where you know that I don't have the private key or mnemonic phrase for the wallet but so far I don't have issues using it. Still, I am very careful not to transfer huge amount of money (in fiat money) as It may be risky (more like money laundering) but in real life or in any platform is that I don't launder money, not ever. I even completed the KYC so that I can use cryptocurrency they accepted which is BTC, BCH, ETH and XRP.
Its looks like I know this custodial wallet and the exchange platform as well.  It's really hard to trust someone on the internet with our personal information but AFAIK, all KYC information that collected on a centralized exchange or a custodial wallet, they are on a separate database that highly encrypted and no one can steal on it unless if there's an inside job or the owner itself will sell that information of our personal data that has been collected.

We should be wise on trusting any websites that ask KYC.  It should have transparency of their team and as possible there's no hiding on a website owner.
Though it feels risky in the future, we don't have anything to do is to abide by the law and a part of the law is to have KYC and since a website license under the law of the government, they also required a KYC.  Searching for legit websites for the KYC thing will less risky in the future.
legendary
Activity: 2716
Merit: 7007
Farewell, Leo. You will be missed!
i believe hardware wallets are a safe way of storing cryptocurrencies from the articles i have read about it, the question i have is what happens if this hardware wallet is stolen or is destroyed, does that mean that the cryptocurrencies on it are lost forever? or is there a way to recover them in the case that the hardware wallet is lost, damaged or stolen?
Although this thread is about the dangers of centralized exchanges, the OP also mentions hardware wallet, so your question remains partially on-topic.

The coins are never on your hardware wallet. Only the private keys which allow you to spend your coins are stored on the wallet. When you set up your wallet, you will be presented with a 12/24-words seed. Everything is derived from that master seed. Make several copies of your seed on paper and store them somewhere safely.

If your hardware wallet breaks and stops working, you can simply get another one of the same type or a different one as long as it's compatible with BIP39 seeds. So, if you use Ledger, get another Ledger or Trezor wallet (those are the most popular ones), import your seed, and you will have access to your coins again. You can also import your seed in a software wallet, but doing that, you lose the security that hardware wallets provide.
newbie
Activity: 1
Merit: 0
i believe hardware wallets are a safe way of storing cryptocurrencies from the articles i have read about it, the question i have is what happens if this hardware wallet is stolen or is destroyed, does that mean that the cryptocurrencies on it are lost forever? or is there a way to recover them in the case that the hardware wallet is lost, damaged or stolen?
copper member
Activity: 224
Merit: 2
TheStandard
The fact that one of the KYC platforms exposes user information is already there, so the security of user information is extremely important, now when IDO projects explode, a lot of KYC projects have been mentioned. as alf a mandatory process to join IDO, so the security of user information is very important.
legendary
Activity: 2268
Merit: 18492
It may work for a while or for other countries but once the government set a rules to abide there's no way a decentralized exchanges would exist especially if it's under the central bank jurisdiction.
I'm not sure you've grasped how a truly decentralized exchange works. It doesn't matter if the government sets rules for exchanges to abide by, or banks place limits on the fiat accounts of exchanges. By definition, an exchange which is actually decentralized does not hold any of your money - be it fiat, bitcoin, or altcoins - at any time. There are no bank accounts which must abide by certain rules, and there is no central company or corporation which can be regulated against or strong-armed by the government. The best decentralized exchange, Bisq, doesn't even run from a website. Much like with bitcoin itself, users download the open source software, run it locally, and connect directly to other users over Tor. A government can't force rules or regulations on it any more than they can against bitcoin itself.

This censorship resistance is one of the main benefits of using a decentralized exchange, along with improved security and improved privacy over centralized exchanges.
sr. member
Activity: 2506
Merit: 368
I don't think so.Because in future Decentralized Exchanges will be most popular.
Even it's true that in future Centralized platforms will lose its popularity and Kyc platforms can pose risks.
Again Decentralized Exchanges will have no risks of being Hacked or stolen.
To know Centralized and Decentralized platforms and Comparison this article will help you-
Article
It may work for a while or for other countries but once the government set a rules to abide there's no way a decentralized exchanges would exist especially if it's under the central bank jurisdiction. And yes, I agree that centralized exchanges are all at risk once it's compromised because your personal information could be used for identity thief or any other means that they could use to take advantage that's why using a custodial wallet is still risky even if it promise you to take care of your personal info.
member
Activity: 362
Merit: 12
legendary
Activity: 1386
Merit: 1111
...gambling responsibly. Do not be addicted.
In ny country, I used a centralized exchange and also a wallet where you know that I don't have the private key or mnemonic phrase for the wallet but so far I don't have issues using it.
Many cryptocurrency traders go for centralized exchanges over decentralized ones. I can't blame them because I use centralized exchanges from time to time as well. But there is no reason to use a custodial wallet with your bitcoin when there are so many good non-custodial options available. No one who used any of the hacked exchanges in the past had any problems with them either until something bad happened. Keep that in mind. Things worked great until one day they didn't. It's better to keep the risks of losing coins as low as possible.   
That is just it, there are differences between privacy and security, using exchanges to buy cryptocurrencies can make someone not to have privacy, but there are still security measures that can help to secure the coin safely on noncustodial wallet, any cryptocurrency that is not active for trading on exchanges should be moved to noncustodial wallet like hardware wallet for safety of the coin, leaving it on exchanges makes it not safe unlike having the mnemonic. What is most worst thing about custodial wallet is that users do not have complete control over the coins, the control can be overridden by the wallet company, if it is not your key, it is not your coin on blockchain nakamura12.
legendary
Activity: 2716
Merit: 7007
Farewell, Leo. You will be missed!
In ny country, I used a centralized exchange and also a wallet where you know that I don't have the private key or mnemonic phrase for the wallet but so far I don't have issues using it.
Many cryptocurrency traders go for centralized exchanges over decentralized ones. I can't blame them because I use centralized exchanges from time to time as well. But there is no reason to use a custodial wallet with your bitcoin when there are so many good non-custodial options available. No one who used any of the hacked exchanges in the past had any problems with them either until something bad happened. Keep that in mind. Things worked great until one day they didn't. It's better to keep the risks of losing coins as low as possible.  
hero member
Activity: 2226
Merit: 667
Bitcoin Casino Est. 2013
In ny country, I used a centralized exchange and also a wallet where you know that I don't have the private key or mnemonic phrase for the wallet but so far I don't have issues using it. Still, I am very careful not to transfer huge amount of money (in fiat money) as It may be risky (more like money laundering) but in real life or in any platform is that I don't launder money, not ever. I even completed the KYC so that I can use cryptocurrency they accepted which is BTC, BCH, ETH and XRP.
legendary
Activity: 2268
Merit: 18492
At those p2p platforms like Bisq or LocalCryptos etc. you might have some bad encounters kin to carders and such resulting in your bank card being blocked. All in all, you will lose both your bitcoins and the money you received from their sale. Would you like such double loss?
I have traded peer to peer for years and never once have had any problems with scammers or having my bank account blocked or investigated. It is very easy to avoid scammers by simply trading with reputable users with thousands of trades and near universal positive feedback. If you are still concerned about accepting fiat electronically, then arrange to trade in cash. And if you are concerned about counterfeit cash, arrange to trade at either an ATM for smaller amounts so the bitcoin buyer can withdraw the cash there and then, or at a bank for larger amounts where the cash can be withdrawn immediately prior to the trade or deposited immediately after to ensure it is not fake.
Pages:
Jump to: