Never store your coins in a CEX wallet

Catenaccio

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Quote from: satscraper on January 28, 2025, 02:31:34 AM

CEX wallets (to be precise, accounts, as we cannot call the wallet that the entity the key of which is not our own) are solely for trading rather for storing.

They are wallets but custodial wallets and users don't own private keys or mnemonic seeds of these custodial wallets.

If users want to have access to private keys or mnemonic seeds of their wallets, they have to use non custodial wallets. It is first important condition, and another condition is open source.

If a wallet is non custodial and open source, with good reviews, it's very good.
https://walletscrutiny.com/

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The size of fund allocated for trading should not exceed the value the loss of which is painless for you.

Big or small fund, we need to keep it safe and by having good practice with small fund, we will be able to have good practice with big fund.

satscraper

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Quote from: DubemIfedigbo001 on January 08, 2025, 08:43:49 AM

The correct discipline have always been to purchase coins or consolidate small units of coins eg. BTC on CEX until it's big enough to pay transaction fee for it and send it to a decentralized wallet for preservation and the correct slogan I've always known is "Not your keys, Not your coin".

However, recently CEXs like Binance, Bitget and especially OKX are introducing their own wallets looking decentralized by issuing keys to it. I know those wallets are still in full control of the CEX and not the investor. It is better to go for decentralized wallets that are open source instead of preserving your precious coins in the wallets of CEXs which you have limited control over.

CEX wallets are centralized and those keys are just a camouflage. Use open source decentralized wallets like Electrum, Blue wallet e.t.c. to have total control over your coins.

Be Warned and Be Wise while making a decision on wallet to preserve your coins.

CEX wallets (to be precise, accounts, as we cannot call the wallet that the entity the key of which is not our own) are solely for trading rather for storing.

The size of fund allocated for trading should not exceed the value the loss of which is painless for you.

All above is a rule of thumb for every stash conscious bitcoiner.

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Quote from: apogio on January 08, 2025, 08:59:30 AM

It's disappointing that still the great majority of people store coins on exchanges.

what's even more dissappointing is that these same set of people would rather die than read a documentary/thread to correct their errors... Why should they cry when the aftereffect comes forth??

Readdddd!!!! That's the only way you can be enlightened. I don't even think they're interested in all of your stories, cause several threads like this have been created over the years -- years before now, HTF did I know all of these in just a few years of my stay in here?

Quote from: apogio on January 24, 2025, 02:16:06 PM

Anyone should do what suits them best. The only thing I am saying is that nobody should grumble about losing their privacy if they use CEXs because by definition they require all your data. Which, if you are fine with it, is perfectly fine.

Again, this is a problem that would have been avoided, only if they read through every important thread that relates to the best storage pattern. "You cannot eat your cake and have it" -- this, you can only have the best privacy and the most enhanced security system exist independently -- thereby, one being served without the other.

apogio

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Quote from: Mpamaegbu on January 24, 2025, 11:32:32 AM

I got you now. Nope, it won't be the same but I will never go that route of meeting someone in person to exchange my coin. It looks like a high risk to me. I don't know if it was safe in the past doing that but certainly it's not safe now. We've seen and read news articles of how people got waylaid or traced to their homes through such.

True! I agree it isn't safe and should be avoided.
There are other P2P options however that work digitally, like BISQ and PeachBitcoin etc.
I don't give financial advice of course. Anyone should do what suits them best. The only thing I am saying is that nobody should grumble about losing their privacy if they use CEXs because by definition they require all your data. Which, if you are fine with it, is perfectly fine.

Mpamaegbu

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Quote from: apogio on January 24, 2025, 08:33:44 AM

Quote from: Mpamaegbu on January 24, 2025, 07:55:21 AM

~snipped~

So, if we arranged a meeting in a mall or anywhere and I gave you cash and you sent me bitcoin, would it be similar to giving a CEX my full name, ID number, address etc?

I got you now. Nope, it won't be the same but I will never go that route of meeting someone in person to exchange my coin. It looks like a high risk to me. I don't know if it was safe in the past doing that but certainly it's not safe now. We've seen and read news articles of how people got waylaid or traced to their homes through such.

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Quote from: hd49728 on January 24, 2025, 09:17:04 AM

People are free to do things they want, and with their money, they are free to choose storing their bitcoin in custodial or non custodial wallets.

Whether they had chance to know of "Not your keys, not your coins" mantra in Bitcoin community, if they don't take it into account for their Bitcoin storage practice, they afford to lose their bitcoins to custodians.

If they care about their money, they will care of learning how to secure their money, like their bitcoin in a non custodial wallet with some basic learning and some simple steps to create a wallet (offline), back it up, test backup, funding test, and full funding.

Some people don't do backup test but if they are recommended to do it, they will have more reason to do backup test. Honestly when I used non custodial wallets a first time, I did not test wallet backup. I did made backup but did not test it, and it's my bad practice in the past because nobody told me about this step.

Anyone is free to do anything they want. But this doesn't mean that I won't express my opinion when I see bad practices. The reason why I do it, is because history repeats itself and many times people repeat the same mistakes. Having seen them in the past, makes me wanna warn people of the dangers ahead.

hd49728

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Quote from: apogio on January 24, 2025, 08:33:44 AM

Custodians have full control over an asset that is supposed to be private for each individual owner.

The whole purpose of Bitcoin is not to use intermediaries as stated in the first sentence in the abstract of the whitepaper. ^[1]

What you say, in fact, goes against the primary reason why bitcoin was invented.

If anyone can't safely guard one string of characters, or 12 words, then it's better for them not to own bitcoin.

[1] https://bitcoin.org/bitcoin.pdf

People are free to do things they want, and with their money, they are free to choose storing their bitcoin in custodial or non custodial wallets.

Whether they had chance to know of "Not your keys, not your coins" mantra in Bitcoin community, if they don't take it into account for their Bitcoin storage practice, they afford to lose their bitcoins to custodians.

If they care about their money, they will care of learning how to secure their money, like their bitcoin in a non custodial wallet with some basic learning and some simple steps to create a wallet (offline), back it up, test backup, funding test, and full funding.

Some people don't do backup test but if they are recommended to do it, they will have more reason to do backup test. Honestly when I used non custodial wallets a first time, I did not test wallet backup. I did made backup but did not test it, and it's my bad practice in the past because nobody told me about this step.

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Quote from: Mpamaegbu on January 24, 2025, 07:55:21 AM

Options two and three seem alike to me. What makes you think that option three is better a choice than two, privacy wise?

So, if we arranged a meeting in a mall or anywhere and I gave you cash and you sent me bitcoin, would it be similar to giving a CEX my full name, ID number, address etc?

Quote from: Mpamaegbu on January 24, 2025, 07:55:21 AM

Don't forget that we also have instances were coins are forever lost because owners lost private keys or seedphrases to their noncustodial wallets. If those coins were left in Cexs and owners forgot their passwords to their accounts, it won't be lost forever. All they would do would be to activate forgot password tab and then go through verification (in extreme cases) to prove they're the rightful owners. Sadly, that's not the case with noncustodial wallets.

Custodians have full control over an asset that is supposed to be private for each individual owner.

The whole purpose of Bitcoin is not to use intermediaries as stated in the first sentence in the abstract of the whitepaper. ^[1]

What you say, in fact, goes against the primary reason why bitcoin was invented.

If anyone can't safely guard one string of characters, or 12 words, then it's better for them not to own bitcoin.

[1] https://bitcoin.org/bitcoin.pdf

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Quote from: DubemIfedigbo001 on January 08, 2025, 09:23:41 AM

Quote from: tranthidung on January 08, 2025, 09:08:09 AM

Quote from: DubemIfedigbo001 on January 08, 2025, 08:43:49 AM

BTC on CEX until it's big enough to pay transaction fee for it and send it to a decentralized wallet for preservation

You did not fully understand what you wrote as your advice to others. Be more careful and more accurate next times!

There are custodial and non-custodial (aka. self-custodial) wallets. There is nothing like centralized wallets and decentralized wallets.

You can store your bitcoin in centralized platforms as CEX, and in custodial wallet but remember it is not a centralized wallet.

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the correct slogan I've always known is "Not your keys, Not your coin".

This is correct!

Bitcoin Q&A: Not your Keys, Not your Coins

I know what I'm saying sir, in order to send funds from my OKX wallet to it's exchange I pay transaction fees and recently I lost my phone and when I tried retrieving my wallet, I could only retrieve my exchange which was binded to my email and keys were requested before I can have access to my wallet.

I initially thought they were intertwined and the wallet is merged with the exchange since it's the same entity, but I found out there was a clear distinction between the two and I lost all coins in my OKX wallet while my exchange was intact because I didn't have the keys.

These CEX, some even now have different application for their wallet versions and you can store coins in both their exchanges and their wallets differently.

Consider the image below for more clarification

tranthidung is correct. There's nothing like centralized wallets and decentralized wallets. If centralized exchanges have developed their own wallets like the ones you showed above, you can't call those wallets centralized wallets because there's nothing like centralized wallets or decentralized wallets. We only have two types of wallets, which are non-custodial wallets and custodial wallets. The wallets that are being developed by centralized exchanges can't be called centralized wallets, but they can be called custodial wallets because third parties like centralized exchanges have access to the wallets private keys, which don't give people who are making use of those wallets complete access to their assets.

Catenaccio

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Quote from: Mpamaegbu on January 24, 2025, 07:55:21 AM

Don't forget that we also have instances were coins are forever lost because owners lost private keys or seedphrases to their noncustodial wallets. If those coins were left in Cexs and owners forgot their passwords to their accounts, it won't be lost forever. All they would do would be to activate forgot password tab and then go through verification (in extreme cases) to prove they're the rightful owners. Sadly, that's not the case with noncustodial wallets.

There are stories like this but this year is 2025 and no longer 2009 or some past years ago, with many resources educate people about Bitcoin, importance of wallet backups for recovery later, such stories become less.

How to back up a seed phrase?

The article says that users must test backup too. Backup a wallet is good but not enough, test a backup is another important step.

Some people even lost acces to their emails and don't know what are emails they used for exchange account registration. With them, custodial wallets or non-custodial wallets are the same, they can lose money with all of those wallets.

Mpamaegbu

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Quote from: apogio on January 22, 2025, 11:55:19 AM

I don't use OKX, but, if they give you a universally accepted seed phrase, like a BIP39 seed phrase for example, then you can take the seed phrase and put it in any software wallet (electrum, sparrow etc.) and retrieve your coins. Which means that you can just withdraw your money without ever logging in to their website. Do they offer this feature? If so, great for them!

Yes OKX, just like Binance and a few other Cexs, now have Web3 wallets like our regular non-custodial wallets with seedphrases.

Quote from: apogio on January 21, 2025, 02:29:59 AM

So to summarize:

1. Buying with CEX and holding BTC there: BAD security, BAD privacy
2. Buying with CEX and holding in your own wallet: GOOD security, BAD privacy
3. Buying P2P and holding in your own wallet: GOOD security, GOOD privacy

Options two and three seem alike to me. What makes you think that option three is better a choice than two, privacy wise?

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Keep this mentality and you will be good: Money in CEXs can just be considered lost money and if you are lucky, you may get them back in the future.

Don't forget that we also have instances were coins are forever lost because owners lost private keys or seedphrases to their noncustodial wallets. If those coins were left in Cexs and owners forgot their passwords to their accounts, it won't be lost forever. All they would do would be to activate forgot password tab and then go through verification (in extreme cases) to prove they're the rightful owners. Sadly, that's not the case with noncustodial wallets.

CryptSafe

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Quote from: Awaklara on January 09, 2025, 09:34:50 AM

Quote from: DubemIfedigbo001 on January 08, 2025, 08:43:49 AM

CEX wallets are centralized and those keys are just a camouflage. Use open source decentralized wallets like Electrum, Blue wallet e.t.c. to have total control over your coins.

some who still store their assets on the exchange are beginners, but those who have trading interests I am sure still store their assets on the exchange.
past events can give us valuable experience not to store assets on the exchange. beginners who come to invest or trade must also know such information. do not just trust exchange advertisements as a trusted platform.
exchange is not a platform for storing assets, even if you want to store them in a wallet, of course, we have to choose the right wallet. I use Electrum.

You are right and most beginners are the people who store their assets on CEX because they feel it is safer there and if anything happens, they have someone to hold responsible which most times does not end up so. However, there are still some people who are old in the crypto industry and are still storing their assets in the CEX citing safety as a reason to do so even after hearing all these big hacks and lots more, they are still ignorant of the fact that the CEX can not guarantee the safety of their assets and as such can not even protect their sophisticated exchange from hackers. People still do not take their asset safety seriously as they too are not security conscious as well.

It is even easier to keep your assets under your custody because you will have full access to them anytime you want it, you do not have to fill out any KYC form or provide documents as CEX does. You control your assets and can use them for anything you feel buying or investing in. What one just needs to do is just to download a good and well-secured wallet get their private keys and store their asset there.

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Quote from: Hyphen(-) on January 23, 2025, 04:06:04 PM

The centralized exchanges are always looking for ways to keep increasing their income, and seeing that decentralized wallets that support multi-chains are getting more popular than the centralized exchanges, even though most of these centralized exchanges that have been active for long still want to make ways for people to trust them with their wealth, which is why they decide to create and also add web3 decentralized wallets so that they can keep their fans and their users.

Web3 wallets are not decentralized wallets. Centralized or decentralized are more correct to use for descriptions about a blockchain, an exchange, but it is not accurate to describe a wallet.

A wallet is either custodial or non-custodial.
A wallet is either open source or close source.

Web3 wallets are non custodial wallets, but they can be either open source or close source.

Web3 wallets are built by centralized exchanges are more likely close source.

Hyphen(-)

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Quote from: DubemIfedigbo001 on January 08, 2025, 08:43:49 AM

However, recently CEXs like Binance, Bitget and especially OKX are introducing their own wallets looking decentralized by issuing keys to it. I know those wallets are still in full control of the CEX and not the investor. It is better to go for decentralized wallets that are open source instead of preserving your precious coins in the wallets of CEXs which you have limited control over.

CEX wallets are centralized and those keys are just a camouflage. Use open source decentralized wallets like Electrum, Blue wallet e.t.c. to have total control over your coins.

Be Warned and Be Wise while making a decision on wallet to preserve your coins.

The centralized exchanges are always looking for ways to keep increasing their income, and seeing that decentralized wallets that support multi-chains are getting more popular than the centralized exchanges, even though most of these centralized exchanges that have been active for long still want to make ways for people to trust them with their wealth, which is why they decide to create and also add web3 decentralized wallets so that they can keep their fans and their users.

Newbies, and my colleagues, please don't rely on such wallet with your coin, and remember that Not Your Keys, Not your coins, Don't trust their web3 wallets, I don't think they are open source, and since it is embedded or added with the exchange, they can still have control over your coins; therefore, avoid leaving your coin in such

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Quote from: apogio on January 23, 2025, 09:55:30 AM

Quote from: NotATether on January 23, 2025, 07:32:50 AM

You'd think that after what happened with FTX and all the high-profile people who lost their money, they would learn a lesson and store coins in their own wallets.

I 'd hope so, yeah.
In fact, most people wanna do things easily, conveniently and super fast.
None of the above go along with security, because it requires clarity and no rush, to make sure that you eliminate as many points of failure as possible.
That's why I dislike the whole degen web3 idea. Or at least, it's not for me.

Many people prioritize convenience above all else, but sometimes, convenience can be very risky, especially for those investing in crypto. One major reason some people still store their bitcoins in wallets provided by exchanges is that it's simply the easiest option for them. Although they are aware of the risks associated with using exchange wallets, they remain unconvinced to make a better choice because they haven't fallen victim to those risks yet.

Newbies here in bitcointalk forum are very lucky because if they actually read, they would never make some wrong choices which involves storing their coins on exchanges.

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Although the authorities have managed to seize part of the lost assets on FTX, and despite their recent decision to start distributing to more than 90% of users, and despite the fact that the compensation value has reached 119%, the compensation value is in dollars and not in Bitcoin. Those who lost their assets on FTX also lost the opportunity to double the value of their assets after the last bullrun and therefore they are losers even if they are compensated. This is an example of the risk of using trading platforms as long-term storage wallets. No one knows what can happen in the inner kitchen of any company and there is no guarantee that the company will be able to compensate for the damage if a disaster occurs. Everyone should be careful and aware that the crypto space requires them to be directly responsible for securing their assets from any potential damage.

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Quote from: NotATether on January 23, 2025, 07:32:50 AM

You'd think that after what happened with FTX and all the high-profile people who lost their money, they would learn a lesson and store coins in their own wallets.

I 'd hope so, yeah.
In fact, most people wanna do things easily, conveniently and super fast.
None of the above go along with security, because it requires clarity and no rush, to make sure that you eliminate as many points of failure as possible.
That's why I dislike the whole degen web3 idea. Or at least, it's not for me.

NotATether

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Quote from: apogio on January 08, 2025, 08:59:30 AM

It's disappointing that still the great majority of people store coins on exchanges.

You'd think that after what happened with FTX and all the high-profile people who lost their money, they would learn a lesson and store coins in their own wallets.

But no, they want other companies to store their money for "convenience" (!!!) - and they aren't even regulated like banks nor should they be.

It keeps happening over and over again and there's nothing we can do about it other than advising people.

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Quote from: apogio on January 23, 2025, 02:12:08 AM

The problem is that since you don't control the money and since these companies are obliged to follow legislation (which is good), they may be forced to:
1. stop withdrawals for some time

2. stop accepting deposits for some time

It will cause panic and bank run. Nightmare from CEX can happen because they are scammers or if they have bad treasury management. I don't know nowadays there are CEX with treasury managed only by a CEO. In the past, there were centralized exchanges have troubles when their CEOs passed away with private keys.

Cryptocurrency exchange CEO dies - with the only key to $137M.

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3. liquidate your assets and send you your FIAT exchange back

It's how FTX users will receive their money after FTX collapse in 2022.

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So, in summary, you don't control your assets if they are in a CEX.

Not your private keys, not your coins. With CEX, you don't have any private key of your coin.
Reminder: do not keep your money in online accounts.

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Quote from: nakamura12 on January 08, 2025, 05:04:12 PM

I can say that they do trust people who owns the cex since they are storing their coins on the exchange when we know that it isn't really safe to store coins on a platform that you don't have full control.

The dangerous case is not that the owner of the CEX will go away with their money, especially if the CEX is huge like binance, kraken etc.
In these cases, the owners are well known to authorities, so this makes it very difficult for them to just run away.

The problem is that since you don't control the money and since these companies are obliged to follow legislation (which is good), they may be forced to:
1. stop withdrawals for some time
2. stop accepting deposits for some time
3. liquidate your assets and send you your FIAT exchange back

So, in summary, you don't control your assets if they are in a CEX.

Topic: Never store your coins in a CEX wallet (Read 783 times)