Topic: should we hesitate if exchange have huge reserve? (Read 379 times)
That's wrong to think that just because they have huge reserve funds, you should trust their coins. We go back to what we're always saying if it's not our keys, then it's not our coins. I don't store my Bitcoins on any reputable exchange even if they will say that funds are safu or they have a huge backup fund and reserve for everyone's safety. There is no assurance with any unforeseen event such as hacking, what if the hackers siphoned all of those and none was left? there's no chance for a refund despite that guarantee even if they are true to their words because, in the end, they can also say that there is no refund to everyone to cover the losses or simply refuse to do so.
You should hesitate to keep your money on any exchange. It doesn't matter how much that exchange has, they can get hacked or they can crash. They can even wake up one morning and accuse you of receiving tainted coins and freeze your account even before giving you a chance to explain yourself, that's if you'll ever get a chance.
Gone are the days when people are fooled by the "too big to fail". The worst part is that you may not get your money back if anything happens to the exchange. They'll make so many promises but when things go south, a lot of things will be out of their control and there will be nothing you can do to get your money back.
As of 2021, FTX had over $1 billion in revenue and $388 million in net income, but we all know how it ended
Gone are the days when people are fooled by the "too big to fail". The worst part is that you may not get your money back if anything happens to the exchange. They'll make so many promises but when things go south, a lot of things will be out of their control and there will be nothing you can do to get your money back.
As of 2021, FTX had over $1 billion in revenue and $388 million in net income, but we all know how it ended
I can't stress this enough: YES. In fact, I'd say that having a lot in reserves poses a higher risk, as the exchange becomes a higher target for hackers. Binance is probably the most well known exchange to everyone in the space. It was hacked in the past, and people lost their coins.
Bitcoin is meant to be self-custodied. If there's one word to describe Bitcoin it'd be "sovereignty". Play the game right. Don't trust, verify.
Bitcoin is meant to be self-custodied. If there's one word to describe Bitcoin it'd be "sovereignty". Play the game right. Don't trust, verify.
Indodax is fortunate that only a small amount was hacked. But what if it was a large sum that the exchange couldn’t return? This highlights why it’s not advisable to keep your Bitcoin on any exchange unless you're actively trading. Even then, you should manage how much you expose to the exchange because you never know what could happen. If we truly care about our Bitcoin, we need to think about the worst-case scenario.
The funds were returned this time, but it was at the discretion of the exchange, aiming to protect its reputation and regain traders' trust. However, you can't rely on this happening every time....what if the exchange chooses to exit scam? This has happened to other exchanges in the past and could happen again. Always remember what happened to Mt. Gox in 2014 and other exchanges like QuadrigaCX and Cryptopia. Protect your assets, and don’t put all your trust in exchanges.
The funds were returned this time, but it was at the discretion of the exchange, aiming to protect its reputation and regain traders' trust. However, you can't rely on this happening every time....what if the exchange chooses to exit scam? This has happened to other exchanges in the past and could happen again. Always remember what happened to Mt. Gox in 2014 and other exchanges like QuadrigaCX and Cryptopia. Protect your assets, and don’t put all your trust in exchanges.
When I look now, that exchange back to normal operation and tends to increase transaction, which means many people in our country is look don't care about what happened on the previous week.
The increase in trading volume may be fake, making it seem like users quickly forget what happened before, but in fact users are trying to be more careful.No matter how much their reserve assets are, it is not a guarantee that they will pay when a similar incident occurs and their reserve assets may also decrease in value, and the user is not aware of it.
The reserve assets can only make traders comfortable because they do have to put their assets there for daily activities, but for investors who hold for the long term, it is not a good thing to store on the exchange, but in fact, no matter how hard they try to convince users, it is still not recommended to store our coins on the exchange. As a member of this forum, you certainly understand the security of your coins.
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Maybe that's why I have to think now, because regulation in my country is not so transparent. Law enforcers in my country is easy to suborn. Maybe if the exchange got hacked, the owner exchange can easily manipulate it to bankrupt (by suborning money to Law enforcers) to avoid compensation to customers. So, I don't know really well how law in japan, but when I look how their government pressing FTX to pay the compensation to costumer, I think people in japan don't have to worry to keep their asset on japan exchange because their government very attentive. So it depends on where you live, if Law enforcers your country look "easy to work" with owner exchange, then you must be don't be take too long to keep your assets there.Storing bitcoin assets on centralized platforms is inherently risky from the start as it goes against the decentralized concept of bitcoin and things get riskier if your country's regulations are not transparent. I think those reasons are probably enough for you to withdraw all your assets from centralized platforms if you are really concerned about the safety of your assets.
I don't hate the government like many others, I still trust them to some extent but human nature is greedy and government is human too. So, we should protect the most important things ourselves instead of trusting others, especially those not related by blood.
But in my country, all crypto exchanges must report their financial and asset for each month to the Financial Services Authority. If they are not reported, their license as exchange will be revoked and they are not permitted to operate in Indonesia. That's why I asked, to make sure I have to right decision to still keep my bitcoin on exchange until next year.
Basically, local exchanges that are regulated by the government are safer than unlicensed and unregistered exchanges in the country so it can be said that they are somewhat safer. But that doesn't mean they won't go bankrupt and compensation will be processed quickly afterwards. It all depends on the laws in your country as well as the agreements between the exchange and the government.Likewise, most of the victims of FTX have yet to receive any compensation but the Japanese government has been asking the Japanese branch of FTX to compensate their investors since last year. As I said, it all depends on the laws of each country so there will be different levels of safety.
But as an experienced bitcoin investor, I think you also know the risks when you store your assets on centralized platforms. Therefore, it would be unwise to continue trusting them even if they are government regulated.
But, as normal people, should I still hesitate to keep my bitcoin on that exchange if they have a huge reserve? because if they lost or got hacked, they can easily pay your loss and that shouldn't worry.
Always use exchange for what it is intended for, and that is to trade your coin. Even if they have large reserves, that should not be a reason for you to ignore the golden rules of not your keys, not your coins, and putting your trust in exchange to store your coins.
Anything can happen at anytime. Scammers and hackers are always on the move, and the regulators are always looking to penalize exchange, These are danger signs, so be responsible with your coin and secure it with a non-custodial wallet that you can keep and secure.
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If the exchange can be hacked, that means the reserve wallet can equally be hacked. Coincidentally, both exchange and reserve wallet got hacked at the same time, the exchange would not have any better explanation to give than to pause their project and start making plans and promises of how they can repay customers which is not going to be a sudden repayment plan. Even if an exchange have a huge reserve, I will risk not risk saving my coins there, perhaps cex is not for storing coin, self custodial wallets are.
Crypto exchanges cannot easily be monitored. They can easily move their reserves or exceed the limits of the financial operation.
But in my country, all crypto exchanges must report their financial and asset for each month to the Financial Services Authority. If they are not reported, their license as exchange will be revoked and they are not permitted to operate in Indonesia. That's why I asked, to make sure I have to right decision to still keep my bitcoin on exchange until next year.Basically, local exchanges that are regulated by the government are safer than unlicensed and unregistered exchanges in the country so it can be said that they are somewhat safer. But that doesn't mean they won't go bankrupt and compensation will be processed quickly afterwards. It all depends on the laws in your country as well as the agreements between the exchange and the government.
Likewise, most of the victims of FTX have yet to receive any compensation but the Japanese government has been asking the Japanese branch of FTX to compensate their investors since last year. As I said, it all depends on the laws of each country so there will be different levels of safety.
But as an experienced bitcoin investor, I think you also know the risks when you store your assets on centralized platforms. Therefore, it would be unwise to continue trusting them even if they are government regulated.
There has been a lot of hacking in a lot of places, stake got hacked, primedice got hacked, binance even got hacked, and still continued without much interruption. Obviously there were also many places in crypto were they got hacked and then bankrupted and closed. We called most of them "exit scam" because they just say they got hacked and closed, but we do not know if they just took our money and left or they actually got hacked.
So all in all if a place can survive and continue, then you will know about it, they will continue, some will be like mt.gox and just get ruined, some will be like binance where they continue without a trouble because they will have a huge huge cold storage where even if all the hot wallet got hacked, cold will be enough to continue.
So all in all if a place can survive and continue, then you will know about it, they will continue, some will be like mt.gox and just get ruined, some will be like binance where they continue without a trouble because they will have a huge huge cold storage where even if all the hot wallet got hacked, cold will be enough to continue.
Indodax did what Stake, Primedice & Binance did, they still continued operations even though hacking occurred there. So, do i & other local users still have to trust Indodax?
This is not about the strong security they create, but about our responsibility as asset owner. I have learned a lot from the cases that have occurred that it is not good to store a lot of assets on a centralized platform, let alone going all-in there. In conclusion, i will not trust any more to centralized platforms, i just want to do what should be done there, Binance is only for trading, Stake & Primedice is only for gambling, none of that is for storing assets there.
Definitely most people don't care with hack or something bad happen as long as it can be fixed ASAP, but if they were leave their coins in Mt.Gox, it will teach them a good lesson.
Some people never took the lessons what happen on another exchange before. Many reason they told me to still keep their asset on exchange i.e. (want save the fee, and don't want to wait too long for busy network). Keep the asset on the exchange making them quickly to sell their assets if the coins pump or can easy to cut lose if coins dump. So with this situation, i'm not surprised if the trader as one of the most victims if the exchange was hacked. The investor or long-term holder is still save because they always keep their asset on non-custody or hardware wallet.Crypto exchanges cannot easily be monitored. They can easily move their reserves or exceed the limits of the financial operation.
But in my country, all crypto exchanges must report their financial and asset for each month to the Financial Services Authority. If they are not reported, their license as exchange will be revoked and they are not permitted to operate in Indonesia. That's why I asked, to make sure I have to right decision to still keep my bitcoin on exchange until next year.
A couple week ago, our local exchange Indodax got hacked and lost about ±20 Million USD. But, they was recovered fast and back to normal after 80 hours incident. They also were proof that they have about 750 Million USD assets and published it on their site. This means with that their huge asset, they can easily pay back to customers if got hacked on their exchange. But, as normal people, should I still hesitate to keep my bitcoin on that exchange if they have a huge reserve? because if they lost or got hacked, they can easily pay your loss and that shouldn't worry.
When I look now, that exchange back to normal operation and tends to increase transaction, which means many people in our country is look don't care about what happened on the previous week.
Doubts must remain, Indodax can still operate after they are hacked because they still have a larger number of assets, but what if what was hacked was all the assets? can they refund the user's balance?When I look now, that exchange back to normal operation and tends to increase transaction, which means many people in our country is look don't care about what happened on the previous week.
Honestly, i'm an Indodax user, but after the platform returned to normal, i immediately took the assets i had there & moved them to a non-custodial wallet. I will not use that platform again.
So all in all if a place can survive and continue, then you will know about it, they will continue, some will be like mt.gox and just get ruined, some will be like binance where they continue without a trouble because they will have a huge huge cold storage where even if all the hot wallet got hacked, cold will be enough to continue.
A couple week ago, our local exchange Indodax got hacked and lost about ±20 Million USD. But, they was recovered fast and back to normal after 80 hours incident. They also were proof that they have about 750 Million USD assets and published it on their site. This means with that their huge asset, they can easily pay back to customers if got hacked on their exchange. But, as normal people, should I still hesitate to keep my bitcoin on that exchange if they have a huge reserve? because if they lost or got hacked, they can easily pay your loss and that shouldn't worry.
Proof of reserve is still the dumbest thing to fall for and safe your coins on an exchange, this funds are most at times not true they are simply just figures that centralized exchanges have been using of rent to lure more customers, example is the binanace SAFU which I still don’t trust. This funds can also be hacked even if they are true, so to me the best of storage still remains personal storage.
Take a look at Mt.Gotx even though there is funds to be distributed do you see all members getting their funds back? That’s another thing to be worry about imagine when you need your funds and the hacked exchange even if they have extra coins on their reserve gives a date which doesn’t align with your time of need isn’t that affecting your freedom of money. So there are many reasons to avoid this kind centralized exchanges.
There is no reason why you should store your funds in an exchange. Even if an exchange displays their reserves, do you know what the liabilities are, and how are you sure that what they have will cover liabilities.
Centralized exchanges also engage in fractional reserve, so most of their customers funds are used in the pursuit of returns for the exchange, if any of those investments fail or if there is a 'bank run', then the exchange will surely file for bankruptcy and customers will have to wait for years in the hope of getting something back.
Centralized exchanges also engage in fractional reserve, so most of their customers funds are used in the pursuit of returns for the exchange, if any of those investments fail or if there is a 'bank run', then the exchange will surely file for bankruptcy and customers will have to wait for years in the hope of getting something back.
Even with Indodax recovering quickly and showing proof of large reserves, it's always wise to be cautious. Exchanges can be vulnerable to hacks, no matter how large their reserves are. While they may be able to cover losses but i suggest you is, keeping your Bitcoin on a hardware wallet (like your Ledger Nano S Plus) is a safer option for long-term storage.
A couple week ago, our local exchange Indodax got hacked and lost about ±20 Million USD. But, they was recovered fast and back to normal after 80 hours incident. They also were proof that they have about 750 Million USD assets and published it on their site. This means with that their huge asset, they can easily pay back to customers if got hacked on their exchange. But, as normal people, should I still hesitate to keep my bitcoin on that exchange if they have a huge reserve? because if they lost or got hacked, they can easily pay your loss and that shouldn't worry.
When I look now, that exchange back to normal operation and tends to increase transaction, which means many people in our country is look don't care about what happened on the previous week.
When I look now, that exchange back to normal operation and tends to increase transaction, which means many people in our country is look don't care about what happened on the previous week.
Doubts must remain, Indodax can still operate after they are hacked because they still have a larger number of assets, but what if what was hacked was all the assets? can they refund the user's balance?
Honestly, i'm an Indodax user, but after the platform returned to normal, i immediately took the assets i had there & moved them to a non-custodial wallet. I will not use that platform again.
You should hesitate if your funds are in any exchange, no matter if its a local exchange or Binance with a reserve of billions. Not your keys, not your coins. Some people will never understand this until they lose their funds or get locked out and will have to talk to a robot to get their account access back. It's a pain which I do not want anyone to experience, so just send your funds to a hardware wallet.
It's wonderful when exchanges manage to bounce back fast, and when losses are taken by the organization and users are not experiencing fund reductions. I remember a similar story with Binance a few years ago, when they compensated everyone after a major hack, so everyone was happy and saw it as a reliable place to keep their money. After all, if you keep funds in self-custody, and you somehow get hacked, nobody will reimburse you.
That's a benefit people can consider, but also value it against privacy violations (if an exchange imposes KYC), risks of an exit scam, inconveniences of having your funds frozen, etc.
To me, self-custody is still a better choice. But I believe people are free to choose for themselves, and there are decent arguments for custodial highly reputable services.
That's a benefit people can consider, but also value it against privacy violations (if an exchange imposes KYC), risks of an exit scam, inconveniences of having your funds frozen, etc.
To me, self-custody is still a better choice. But I believe people are free to choose for themselves, and there are decent arguments for custodial highly reputable services.
It's all a question of how you perceive "value". If you only care about the fiat value of your funds, then sure, reserves are fine. If, however, you care more about the value in terms of utility provided by Bitcoin, that value cannot be replaced if the exchange is hacked and loses all their BTC. But then, if you cared about the utility value, you probably wouldn't be storing your coins in an exchange in the first place. People who keep their funds in exchanges are like a different breed. I don't understand them and they definitely don't care about the same things I do.
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