Topic: Short term Investors feeling cool with the centralized Blockchains (Read 175 times)

I have been using CEX since entering this market and still use them until now, I always make it public and have nothing to hide or lie like many others. I agree with your point because as I said everything has risks, CEX, DEX, non-custodial wallets...all have their own risks, nothing is 100% safe or guaranteed.

And what I mean is if we still use CEX in combination with non-custodial wallets like you and me. We need to evaluate fairly, both have their own advantages and disadvantages. Let's not just focus on CEX's shortcomings and demonize it while we exaggerate non custoded wallets.

A person who is in it for the short term might not want to look for permanent methods to store their coins. There are people who change from that short term mindset to a long term one but that is rare, most are indeed in with a get-rich-quick attitude.

But people also help generate some buy orders and thus some liquidity in the market so the long term hodlers can sell when they want to. Each of the different classes of investors have their own role to play.

Shutdown of a Centralized exchange can happen any time. Using their wallet as a store is a bad choice. But they will not learn this lesson.

You may be silently using CEX but I don’t say what isn’t true or tell a lie, at least not in such case. I boldly said that I use CEX even if I warn against it. And I don’t know what you mean badmouth, is it another word for “truth”? You’ve acknowledged my point by saying it’s too risky and you don’t encourage it. My initial reply that created this thread still stands because it’s a very simple and honest reply that didn’t need to be elongated.

As I said, everything has risks. When we store and preserve our assets ourselves, there will also be risks that we cannot fix if there are mistakes. You may have heard stories of people who own millions of dollars worth of bitcoin but they cannot access their non-custodial wallets and that is one of the risks.

I believe that most people are silently using CEX like you and me because of the services and utilities it brings us. But they don't dare admit it because they fear the anger of bitcoin maximalists on the forum. I do not encourage or support anyone to use a centralized exchange to store bitcoin because it is too risky and the risks are beyond our control. But we also don't need to badmouth it while we're still using it.

It is true that some people tend to put themselves more at risk by trying to avoid inevitable situations. Short-term investments are risky and the high transaction fees are one of its consequences.

But if they are so keen about buying and selling in a small periods of time then why not? It is still their decision in the end. I do hope however that scalability issues get resolved. I know it will be long before it actually does get resolved so for the upcoming bull run we are stuck with expensive transaction fees.

This is just short term though, yeah we have months wherein the fees are high but it goes down to normal again. So I wouldn't risk my holdings for just a few bucks for the transaction fees. Security and privacy is still important. For newbies this might be the case, but it's better to learn early that it's not safe to put our bitcoin in a centralized regardless on how "SAFU" it is. And this is the wrong mentally, we have heard horror stories of people accounts getting hack from exchanges, and we don't want to be the next victim as we approach the halving. Put it in a wallet that we have control, then if you need to cash out something then that is the time to send it to centralized exchange to trade.

But I don't think day traders are ignorant people. I believe that all investors are aware of the risks of using centralized exchanges, as once you have decided to participate in this market you have also accepted the risk. And taking more risks to have a chance to gain more profits is what they are thinking about.

Many people are willing to accept the risk of storing assets on centralized exchanges but in return they will have more opportunities to make profits. Such as daily trading, P2P trading, staking... many passive income generating services that CEX is creating to attract users. Meanwhile, if you just leave your bitcoins in a non-custodial wallet, you won't have the opportunity to do those things. They are just a little more greedy, but they are not ignorant.

I wouldn't tell them not to do it because it would be wrong. Basically people have to understand the true risks of what they are doing specially if they are traders. For example at a time like this where we have had a big dip and there is a day left to halving, it is a good idea for a short term day trader to sell and wait for a better opportunity to buy back in. Centralized stable-shit-coins are a risky but a good tool to use in this process.
As they say "invest what you can afford to lose". So as long as you know you can lose your money and how, I'd say it is fine to use them.

As for the price, a quick look at the history shows this exact trend repeating in each halving:
1. big rise in weeks leading to halving
2. big drop as we get close to the halving
3. sideways market during halving and right after it
4. massive rise months after the halving

We are in step 2 right now...

While the Bitcoin dip may attract investors, high transaction fees could lead some to store assets in centralized blockchains for lower costs. However, this approach carries risks. Assets can be compromised regardless of how long they’re stored, and losses can occur even with careful handling of seed phrases. Centralized platforms can be vulnerable, and losses can happen unexpectedly. Therefore, it’s crucial to consider the risks of centralized systems and not just focus on transaction fees. Always prioritize the security of your assets over cost savings.

But there’s no way you can have such issues with a non custodial wallet without you having made the mistake. But with exchanges, it can be very different. I once had tokens on an unpopular exchange and was trying to recover them through 2FA, and I was stressed. They put me through stress asking me to confirm my government name and all of that. That can’t happen in a wallet I completely manage myself. What if the exchange shuts down too? How about the fact that CEX can be pressured by the government and they do certain things against anonymity. Such convo is really not up for debate. Don’t get me wrong; I use CEX, but I completely know that it’s riskier, and that’s why I think storing funds there isn’t a smart decision. In peace again, my friend )

You will barely find a day trader or scalper using a centralized exchange for their trading activities withdrawing their capital after they are done trading for the day and depositing it again the next day. I know it is not a safe practice to keep your funds in a centralized exchange if you know you have a large capital that you use for trading but no one will be ready to pay so much money in fees every day and they would prefer keeping them within the platform.

Keeping your trading capital within an exchange platform is normal since it is a common practice among cryptocurrency traders, but some people would keep the assets that they don't use for trading in an exchange wallet which isn't recommended because if you have your funds idle, you better take them out from the platform and only keep what you use on a daily basis.

Self-Custody is the only means that can guarantee the safety of your Bitcoin.  Saving or holding on centralized platform for me is much risky and we shouldn't practice it, if you have, let it be small and don't hold in a centralized platform.

You can have a plan on how you go about probably bi-weekly,mothly how you accumulate, to ease charges that might come while trying to transfer your bitcoin from your wallet to centralized account price versa.

Self-Custody is a good approach, don't allow anyone deceive you, take control of   your asset.

I do not think avoiding the transaction fees is the main reason people have their Bitcoin on CEXs, what I think is that most persons do it out of ignorance or they're using Bitcoin for trading, I mean the daily traders. I understand that the mempool is a little bit congested right now but it's not as bad as the last time. Also, exchanges charge $10 - 15$ and someone that has a large amount of Bitcoin should be able to cough out the fee and avoid storing Bitcoin on CEX.

Firstly OP I see you use the word centralized blockchain, i would say you are confusing that word blockchain. Let me take bitcoin as an example there is nothing like a centralized blockchain. We have only one blockchain for bitcoin storage and all bitcoin in circulation are on that blockchain. Be it a centralized exchange or non custodial wallet the blockchain holds your bitcoin. On that blockchain, you can only move out your bitcoin only with the key.

The only difference between custodial storage and non custodial storage is that you are not given the keys (private key or seed phrase) when you stored bitcoin on centralized exchange addresses, so when the exchange goes down your bitcoin goes with it, if to say there you’re given the private key then you will have access to also send out from the address not through the exchange. So the blockchain is same and there is no such thing as centralized blockchain but rather a custodial and non custodial wallet

As I said before, when the bull season comes everyone will soon forget the story of the collapse of FTX or Mt.gox. What people care about now is profit, not privacy, decentralization or centralization. But saying that only short-term investors do this is not entirely true, I think even long-term investors are doing it. When the bull season comes, it will become easier to make profits and many people have been waiting for this for many years and they will not miss this opportunity.

Stories about decentralization, privacy... will be discussed more when the bear season comes. During this bull season, what everyone cares about will be profit, profit.

If you send your coins to centralized exchange, it doesn't mean you own Bitcoin in centralized blockchain. CEX didn't use blockchain, they use traditional ledger. So if you sell Bitcoin to USDT, you buy ETH using USDT, you sell ETH to USDC etc, your coins aren't moving at all because it's not recorded in blockchain instead it's recorded in their internal system.

Bitcoin in centralized blockchain is like BTCB (Bitcoin in Binance network), you can trace it through block explorer.

And I'm sure, your heart will also flutter if one day you can't access your non-custodial wallet or don't see your assets in it. Everything has risk, you store your bitcoins with a non-custodial wallet, which means your bitcoins will be 100% safe and there will never be an accident.

Additionally, as long as the exchange is open, even if someone forgets their password, 2FA...people will always have a way to access their accounts. Centralized exchanges have risks and unattended wallets have risks too, nothing is completely safe, absolutely safe, my friend. Make a realistic and fair comparison.

Investors don't mind too much about transaction fee. Let me tell you why?

They don't usually move their assets so they don't care too much about fee of transaction. Who do care most about transaction fee?

Traders on DEX, gamblers and gamers with NFTs, GameFi, Metaverse and similar.

A person can move between chains but to store their assets, they will choose best ones, like Bitcoin, Ethereum, not shit coins. Save $20 in transaction fee and lose $1000 or bigger, it's not smart.

I can’t have my money in a centralized exchange and not worry about it. I may not panic every second but I guarantee that I’ll check back just it be sure it is safe. However, if it was a decentralized wallet, I would leave it there, and even confidently forget about it because I know it’s always going to be there. I can’t imagine how much one’s heart will skip if they tried to log into their CEX wallet and they are told that their password is incorrect or some funny story.

Those who held strong, they'll be the real winners. You're on the right track, but remember, Bitcoin's bigger than just saving a few bucks on fees.

The deal is this: sure, those big exchanges might have cheaper fees for now, but they're missing the point. Bitcoin's about security, owning your own money, true power. And with the way its designed, getting scarcer every day, folks who missed out will be kicking themselves later. Dont get sidetracked by the easy stuff now. Hold those coins, play the long game. This is about building something smarter, safer, something that lasts.

Just like the popular saying on gambling there’s also a counterpart on it on investing which is invest only what you can afford to lose so that you will not feel the pressure of selling your holdings immediately whenever there’s a price correction sign.

Most of the bitcoin holders purchased Bitcoin using their life savings or other money with different purposes rather than investments. Because people will surely neglect the risk of holding assets on exchange if they will suffer more losses when still holding it during correction.

While we are quite approaching the Bitcoin dip against the halving, lot of Investors are already muscled up to dive in accumulating more to their Bitcoin holdings and those who had held the high cost of Bitcoin values as excuse is also being attracted to Invest without cost excuses anymore.

Meanwhile... Due to the high rate of transactions fees, I can perceive it that lot of short term Investors would tend to have their assets stored in a Centralized blockchain for easy transactions in other to minimize transaction charges because they believe once they hits probably at the upcoming bull-run they would sell off their assets without holding for a long term.
They would actually ignore the fact that it is not about how long your assets stays in a particular blockchain that can get it comprised but base on how unlucky the investors can be despites how conscious they can be with their seed phrases.

So if you must be amongst of those with such mentality, I hope you get to be aware of how risky the system of storing your assets in a centralized network system could be because some investors whom had lost their assets stored in the exchange mostly wonders how come can it be possible to lost their funds when the assets has not stayed for too long there in the centralized platform.

Conclusion: Don't assume to scale through the high cost of transaction fees and get your funds get risked on the centralized exchange platforms.