Topic: Newbies: Don't use centralized exchanges! - page 3. (Read 1201 times)

Nice graph that reflects the truth that newbies are mostly always positive when they participate in a new area. Unfortunately, in early days, they usually receive good results and temporary profit that mislead their thinking that they are actually genius. Then, they 'bet' (I use the bet term because it exactly reflects what newbies think of themselves and what the truth is) and go all in.

Consequently, because of lack of knowledge, experience and peak of mount stupid, they will be punish painfully by the market. From the hell after being killed by the market, they will have to go through a very long period of pain and regret, some of people who can survive through that challenging period will see harvesting time later. Just part of survivors will harvest sweet results later because most of them will repeat their mistakes later.

In any market, it's around 20% winners and 80% are losers. Pareto principle

You bring up some very good points. I noticed that the less confident people are about their understanding of finance / economics and technology, the more they trust me and are open to learning, also by researching and reading themselves. On the other hand, people who already dabbled with stocks or who have an education in the field of economics do show these 'hustler-wannabe' traits and clearly find themselves on the spike of the Dunning-Kruger curve. It's much harder getting them to learn, because for that you first have to convince them of the harsh truth that they don't know everything..

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Yes, it's possible that a trade pair for your national currency doesn't yet exist on Bisq. Peer-to-peer trading can happen outside of it too, though of course more risky. There are / were even escrow services for this right on this forum, I believe. Where a trusted member of the community escrows the transaction so both sides are secure. Maybe this could be a solution for you. Also feel free to open a thread on https://bisq.community/ with new trade pair suggestions and encourage people in your local community to make use of it once it's added.

It is true that keeping money traded on centralized exchanges is risky at times and can be controlled at times which can lead to inconvenience at times.  But I have seen that in many countries decentralized exchanges do not have the convenience to take their own money or currency due to which people are bound to trade in centralized exchanges and exchange it in their own currency through P2P.

The understanding of it requires a decent level of maturity and discipline, though. Sure, I can share it with my friend who wants to make a quick cheese with Dogecoin, by the assumption that they'll read it, but I have my doubts they'll soon enough understand why Bitcoin.

Most don't care. I don't know if you had relatives or closed friends who were experimenting with trading, but me who's surrounded by economist and banker graduates, half of which are hustler-wannabes, I can easily say they're not sensitized by these issues at all.

This is why I’ll never ever going to use CEXs as my storage for the crypto assets that I have. Although that it can save us trading fees and with faster experience, it’s biggest downside was the security. Coz’ no matter how they are enforcing these measures, the hackers are just one step ahead in doing whatever it takes to find a backdoor that would bypass restrictions just like the recent Axie Infinity hack on the Ronin Dex.

That's a very good point, indeed.

I have another addition when it comes to the argument that newbies want to trade alts.. Anyone thinking this is good or normal should have a read of this topic: What Can Happen If You Want to Trade Cryptocurrencies, but You Don’t Know How?.
If you have friends or family who want to 'get into crypto' and 'need to trade alts', so they 'need to use a centralized exchange' - tell them they're doing it wrong. They should read that post by Pmalek as well and learn the fundamentals of Bitcoin. Then they can buy Bitcoin.
If they're hellbent on trading, make them read some books on trading and 'paper trade' for a few years before playing with real money.

In general, I believe if only people who know what they are doing, were trading altcoins, their trading volume would be much lower and the amount lost due to ignorance in the field of trading would be much lower as well. I'm convinced that newbies should not use centralized exchanges, since newbies shouldn't be trading altcoins.

How did I forget. There's another reason why traders, specifically, shouldn't use centralized exchanges.

Binance, Coinbase, Kraken, KuCoin, Cash App, FTX followed by an endless list of other less popular exchanges, have millions of users which means they have every detail, from who bought and how much to where are the most buy/sell orders, at what rate etc. Everything needed to bring disruption to the market at any time.

When you use a centralized exchange you support a less fair economy that can be manipulated more easily.

I think this is just your own thought or assumption, this is an experience you can get from either CEX or DEx and what determines it result is the level of your research


here you can make use of no KYC p2p exchanges, but even with that, we have some businesses that are accepting direct payment in bitcoin, we the example of a coffee shop that accept bitcoin for payment, gifts and donations in crypto in Ukraine and citizens school in Dubai also implemented that just to mention few.

It depends on the decentralized exchanges, this thread is not focusing on any other decentralized exchanges than decentralized exchanges that you can convert bitcoin to fiat like Bisq, Localcryptos and Hodlhodl. Unlike altcoin decentralized exchanges that you can not exchange to fiat and full of scam tokens.

Agreed there are a lot of scam tokens on a decentralized exchange and this is where you need to learn in order to identify them. Use the search bar and you will find multiple topics discussing the same.


The best option is to trade on a DEX and use a P2P service to convert your crypto assets to fiat. That will save you from a lot of fees.


Agreed you can spend directly Bitcoin and other selected cryptocurrencies at the store but it also depends on the country that you are living in. You do can spend it online but that is also saturated.

The existence of scam tokens is not an argument against decentralized exchanges. Plenty of centralized exchanges peddle all the same scams. Newbies should be sticking to bitcoin anyway.

By any method you choose with the person you are trading with. Bank transfer, cash deposits, Western Union, Zelle, Advanced Cash, MoneyGram, cash in person, PayPal, TransferWise, Venmo, Cash App, the list is endless.

Not at all. You can spend bitcoin directly with a wide variety of merchants and retailers.

There are some drawbacks to both types of exchange. You have already mentioned what they are for centralized exchange, but what about decentralized ones? A decentralized exchange is full of scam tokens, which are a hard task for a newbie in crypto to identify. Also, how are you going to move your money to your bank account without a centralized exchange? You have to convert it to fiat to spend it right?

Some people are not traders, they are just bitcoin holders and users in a way they prefer not to provide KYC, once KYC is required, they avoid, they also prefer not to go for centralized services as they want full control of their coins.

For scalping, day trading, derivatives and other margin trading, traders do not have much option than to go for centralized exchange. But some centralized exchanges do not require KYC up to certain withdrawal limited, like Kucoin and OKX exchanges which can be the option some traders can first go for but they are still centralized exchanges. The fact still always remain, that centralized exchanges do not give you full control, the exchange have the full control, your coin can be seized, your account can be freezed and many other inconvenience can come up while still also the exchange can be hacked.

Good point but what about trading? This is one of the reasons why centralised exchanges make a lotta sense, I can't do trading on pancakswap or uni swap for example, imagine cex disappearing from crypto space right now what do you think will happen?.. CEX have a major role to play and they will always exists.

Having your email address leaked by a centralized exchange, although extremely common, should be the least of your worries. Most big exchanges, from Coinbase to Binance, have either sold or been hacked for far more personal information than that, including full KYC data, selfies, passports, driver's licenses, and so on. When your identity ends up on the dark net and then used to commit financial fraud, having your email address leaked will be irrelevant.

Except when they don't, which is often. If they decide your activity is suspicious, or they don't like where your deposit came from, or they don't like where your withdrawals are going, or you triggered one of their arbitrary secret algorithms, or 100 other reasons, your account will be frozen and your coins confiscated unless you bow to their ridiculous privacy invasion. And even if you do, there is still no guarantee you'll actually get your coins back.

You have listed logical reasons why a person is moving away from centralized platforms, but your definition of decentralized platforms is not accurate, or you did not define them directly.

90% of decentralized exchanges claim that they are decentralized, but they are centralized in one point or another, for example:

 - No KYC: KYC is not the problem, but rather who manages the money. Can you manage it away from the platform or do you need the platform?
 - No hack: This may be true, but the decentralized platforms are software and there may be some bugs that may ends you lose your money^[1].
 - Privacy: Privacy is a valuable thing, so even decentralized platforms do not give you 100% privacy.

In short, do not look at things from a black and white perspective.

[1] Hacker Exploits Flaw in Decentralized Bitcoin Exchange Bisq

Dude how about if we wanted to trade altcoins with good volume? By any means the thread is good as it advise to avoid centralized exchange, compared to stock which is centralized, Im sure a lot of people doing the same thing when using a stock brokerage platform.

I myself concern with the privacy or data breached. But Ive been into trading, and I like to play with altcoins, especially on Binance. Yes Im aware of the risk. But cant settled for that of bisq which offer a direct, bitcoin and usd trading. Plus the use of p2p system on Binance is pretty useful for convenience. Im not disagreeing with the thought but its rather a security aspect. But Im sure you could consider also those newbies wanted to be involve in trading and not bitcoin alone. Which lacks the perfect trading set up for bisq alone.

It's not as if they will ban and sit on the assets of the people from various countries they don't want to support anymore, binance isn't like that, they will give you time to move out your assets and they will notify all account owners too.

Exchanges like ChangeNow and Changelley are instant exchanges, even you can make use of their service on noncustododial wallets like Coinomi and Atomic wallet (not recommendimg this wallets as they are close source, not also recommendimg instant exchanges), people are only fooled, thinking they exchange from one coin to another in a way no KYC needed for it. But it happen like this:

The instant exchange will provide you an address that belong to the instant exchange (some people can think it belongs to another person that want to exchange coin too, but not).

You will send the coin you want to exchange to the instant exchange address with the amount you want to exchange. (Take note of this)

The instant exchange will send your the coin you exchange for to another address on your wallet.

You should take note that you send coin to the instant exchange address first before you were sent the coin you exchange to, they have the private key to the address, ones you send your coin to the instant exchange address, the instant exchange can decide to force someone to provide his/her KYC or thy will not send any coin you wanted to exchange to while your coin is already with the instant exchange.

Instant exchanges are centralized, but still better than KYC exchanges that users will have to provide KYC even before making use of the exchange service, which can lead to data breach. But to have privacy, all centralized exchanges be it instant exchange or not are not all recommendable.



Some people can think they are using noncustododial wallet, not knowing that Tether Limited can freeze USDT on noncustododial wallet. Using USDT means someone is not having full privacy because Tether Limited can decide to freeze the coin of any users even on noncustododial wallet.

o_e_l_e_o raise similar concerns in this thread some couple of weeks ago, still on centralized exchanges and the enormous possibility of loss of funds when you leave your coins in centralized exchanges, and also the mammoth possibility of your data being exposed in the black market when a hack happens, and with the amount of hacks that has happened on centralized exchanges you always have that feeling there is another one waiting in the wings.

I actually do hope people heed to all of this warning as it indeed cannot be overemphasized, one must not have to wait till they are a victim before they understand that their security should always come first, even if it (their security) is not so convenient for them to set up and maintain (they must do it by all means possible).