I think exchange wallets have much better security than a hardware wallet. Accessing an exchange's wallet requires the entrant to go through a number of steps and security to access the wallet that is not seen in other hardware wallets. To access the hardware wallet, an external software is required, if for some reason your device is infected with a virus or other technical problems occur in the device, but you will not be able to access your hardware wallet very easily. That is why most investors or crypto currency holders consider it safer to keep their coins in exchange wallets.
So with all the stories of hacking of crypto exchanges with the recent FTX exchange hack you still believe that exchanges has better security than hardware wallet, I think you should reconsider your preference for exchange in keeping or storing your coin against hardware wallet, it has had been stated times without number that crypto hodlers should always ensure that their assets are safe in hardware wallets where you have access to your keys, despite all the efforts by exchanges to protect and secure their firewall they still remain vulnerable to hackers due to the increasing sophistication of hackers. 
Topic: Why do people store their cryptocurrency on exchanges? - page 3. (Read 645 times)
The same point of view, those who still store their coins on exchanges so far are probably traders, and traders make up the majority of this market rather than holders. For a trader, other than centralized exchanges, they have almost no other choice, it is considered a must whether they like it or not.
OP, storing assets on cold wallets or non-custodial wallets can only be considered much more secure than exchanges, but by no means absolutely secure. Therefore, you should not be subjective and negligent in preserving your cold wallet.
Great point about traders. I didn't consider it from that perspective.
I plan to just keep my BTC offline on a cold wallet. I plan to hodl for at least 24 months anyway.
Has there ever been a hack of an offline cold wallet? I tried to look it up and don't think it has happened. Computers and laptops infected with malware is a different story.
After all, traders or not, centralized exchanges are very important to us, if we don't store assets on them, we use them daily. I guess you also buy bitcoin from a centralized exchange and then move to a cold wallet, and later if you want to sell bitcoin, the exchange is also what you need, so there is no need to hate it too much.
I also haven't heard of any cold wallet hacks kept entirely offline. But when using a cold wallet, in addition to protecting from hacker attacks, you should also pay attention to storing your seed phrase from problems in life such as loss, fire...
Learning how to use a hardware wallet seems technically daunting to some people. It's not that hard once you know how but even I will admit as a user of Ledger and Trezor wallets it is not so very simple to learn. Not that hard either but it does take some time and effort. There is definitely a learning curve. And some people just don't want to invest the money for a hardware wallet because it does cost a bit of money and certainly and investment of time to learn.
I would suggest a middle ground which is to use a good software wallet with a good history and reputation that gives you self-custody and gives you control of your private keys such as Trust Wallet, Mycelium, Exodus, Atom Wallet, etc. Coinbase also has a good self-custody wallet option. These are very simple to learn how to use.
I have never heard of any of these software wallets being hacked.
I would suggest a middle ground which is to use a good software wallet with a good history and reputation that gives you self-custody and gives you control of your private keys such as Trust Wallet, Mycelium, Exodus, Atom Wallet, etc. Coinbase also has a good self-custody wallet option. These are very simple to learn how to use.
I have never heard of any of these software wallets being hacked.
Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.
The profit from the service on the exchanges is really small compared to the risks we will face. If they want to receive interest through staking on centralized exchanges, then I recommend that they deposit money in the bank, it will be safer because the interest rate is the same but the risk level of the bank will be smaller.
You are right, other than traders, we have no reason to put our money in CEX. We will still need CEX, CEX is still very important can't get rid of it entirely, but use them carefully and never trust them too much.
Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.
Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.
why people store their digital assets on crypto exchanges.
I believe that the benefits often outweigh the risks for certain people. Some others do not just know how much they stand to lose should anything happen to the exchange. For me, the most important lesson for proponents of bitcoin in 2022 is that nothing is guaranteed and nothing is promised. Exchanges are vulnerable to hacking, and they can vanish in an instant, taking with them your money. It's also possible that people keep their digital assets on cryptocurrency exchanges since they just have a tiny number of them there and don't care what happens to the exchange.legendary
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For me, i think reasons why people store their bitcoin/cryptocurrencies on exchanges depends, for example -
\A Newbie - Some one who is new to cryptocurrencies practically and educationally does not know the importance of owning their own private wallet, and also because most of them usually usually start with a very little amount of money, they discover that even if they want to withdraw it to their non-custodial wallet, they cant because there balance is not even enough to cover the withdrawal fees from the exchange.
\A Day-Trader - Professional day traders probably would decide to leave their funds on the exchange since they know they are coming back in the next few hours to continue their trading activities, to them, it makes no sense taking their funds out of the exchange and coming back few hours to deposit it back again, this is not to mentions the fees involved in both transactions.
Though there might still be other reasons, like Laziness and others, i believe the two i mentioned are few of the major reasons why some people still leave their funds on the exchange.
\A Newbie - Some one who is new to cryptocurrencies practically and educationally does not know the importance of owning their own private wallet, and also because most of them usually usually start with a very little amount of money, they discover that even if they want to withdraw it to their non-custodial wallet, they cant because there balance is not even enough to cover the withdrawal fees from the exchange.
\A Day-Trader - Professional day traders probably would decide to leave their funds on the exchange since they know they are coming back in the next few hours to continue their trading activities, to them, it makes no sense taking their funds out of the exchange and coming back few hours to deposit it back again, this is not to mentions the fees involved in both transactions.
Though there might still be other reasons, like Laziness and others, i believe the two i mentioned are few of the major reasons why some people still leave their funds on the exchange.
Luke's case is possibly a targeted attack. Others say the man is rather complacent in his setup. Still others say that Luke was a man, however technically knowledgeable he is, and he committed a mistake in securing vital information.
Whatever, the point is that it cannot be used as an argument to push for custodial services rather than self-custody. And it is utterly absurd and irresponsible for the likes of CZ of Binance to share the advice that people shouldn't manage their own keys because a Bitcoin OG messed up.
Whatever, the point is that it cannot be used as an argument to push for custodial services rather than self-custody. And it is utterly absurd and irresponsible for the likes of CZ of Binance to share the advice that people shouldn't manage their own keys because a Bitcoin OG messed up.
people who keep their crypto on exchanges maybe because they don't know the dangers of storing crypto or assets on exchanges. and they don't know about it
purse. and I also have previous experience of always putting crypto on exchanges, but after joining this forum I came to know how dangerous it is to keep crypto on exchanges. or usually people who store their crypto on exchanges because they believe the exchange they choose is trusted. so they are not afraid to put their assets on the exchange.
purse. and I also have previous experience of always putting crypto on exchanges, but after joining this forum I came to know how dangerous it is to keep crypto on exchanges. or usually people who store their crypto on exchanges because they believe the exchange they choose is trusted. so they are not afraid to put their assets on the exchange.
everyone's mindset is different, and of course everyone has different goals, and also everyone's courage is different. and most people who put assets on the stock exchange are mostly beginners who of course don't know the risks of putting assets on the stock exchange, and it could also be because they usually trade short-term, or indeed the assets on the exchange are few so they won't be afraid to lose assets.
the reason I keep my funds/assets on the stock exchange is because for me it makes it easier to transact when the market is supporting when the market is up/down (right time to sell and buy), but the shadow of losing is definitely there and always makes me anxious when there is news of a stock exchange hacking
with yesterday's incident I withdrew my main assets to my personal wallet and understand how sensitive the exchange is, because not only can hacking lose money but exchange failure can also make our funds disappear without clarity
with yesterday's incident I withdrew my main assets to my personal wallet and understand how sensitive the exchange is, because not only can hacking lose money but exchange failure can also make our funds disappear without clarity
Not everyone keep their holdings on centralized exchanges. Most of the users who keep cryptocurrency on centralized exchanges were the users with small amount of holdings. These people involve into trading activities as well as spend directly. The convenience is the prime factor that makes them make use of centralized exchanges for all cryptocurrency associated needs.
I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.
These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
I do not think that most people truly understand the spirit and motivation behind cryptocurrency, especially Bitcoin. Its about taking away the power that others have over our money and our life by decentralization, trust-less payments and making your money your own responsibility.
But for some people, this responsibility is too much so they would rather outsource it. Whether for convenience or just because they do not trust themselves with holding on to their own money, people still run to the exchanges and hand over all their money.
Its a lazy and sad excuse but at some point, when their money is taken away from them, they will understand the spirit of crypto. Then perhaps they will become true hodlers.
Suffice it to say, we need to push decentralization and decentralized tech much much harder. People are definitely starting to wake up.
It is quite easy to answer why people store their cryptocurrency in exchanges.
1. They are lazy.
2. They have limited knowledge of securing their fund.
3. They are actively trading
4. They had avail for earning through staking and lending programs.
5. They wanted to save withdrawal processing and deposit transaction fee.
6. They have limited knowledge on setting up their own wallet and too afraid to move their coins thinking that they can possibly misclick or input wrong address that may cause their funds to poof.
Pretty much that says the majority of the reason why people store their cryptocurrency in exchanges.
I tend to agree with what you've all said except the number 1. 1. They are lazy.
2. They have limited knowledge of securing their fund.
3. They are actively trading
4. They had avail for earning through staking and lending programs.
5. They wanted to save withdrawal processing and deposit transaction fee.
6. They have limited knowledge on setting up their own wallet and too afraid to move their coins thinking that they can possibly misclick or input wrong address that may cause their funds to poof.
Pretty much that says the majority of the reason why people store their cryptocurrency in exchanges.
No one becomes lazy when it comes to valuable stuff, because that's your asset and if you'll know that it'll be lost in the future, then you have to save it.
That category will belong to the lack of knowledge, they store on exchange because they thought that it's safe and there's always support to ask when every time they'll forget or lose their credentials to access the account, unlike non-custodial wallet or exchange it's all your responsibility to keep your private key.
Another factor could be, that Binance promised their users that their fund was in SAFU, but poor users only believed in the marketing strategy so that they will not leave on exchange put into a trust. People have learned now, that FTX and Binance recently happened was have an impact on the community on how to store your coin in a right place.
I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.
Some to get measly return via staking, some simply due ignorance, thinking that exchanges are sort of banks and that they funds are "safu", some are simply too afraid to hold their own coins and would rather put that responsibility in someone else's hands. Neither of these reasons make any sense, but that's people. What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
Since their "safu" fund is allegedly 1 billion and Binance is in control of tens of billions of dollars, you can imagine what would happen and whether they would be able to reimburse everyone.I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
In the early days bitcoin attracted mostly people who were heavily into privacy, freedom, believed in "be your own bank" thing, but majority of bitcoiners nowadays don't really care about any of those things exepct numbers going up, so this example of yours doesn't surprise me one bit.They store because they want higher exchange rates in future.
And how exactly you get "higher exchange rates" by storing your crypto on the exchange? Exchanges are for trading (exchanging) currencies, not for storing.Okay put 100000 Doge you own on an exchange.
Set 3 sale points
33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents
set it and forget it.
doge was 0.2 cents in 2020
doge peaked at 70 cents in 2021
So the above is doable.
or was possible to do.
At the moment I have Zil on an exchange it is from merge mining etc and zil
I sell all the etc and list the zil at 10 cents 20 cents and 30 cents.
I also do this kind of strategy. Putting my cryptocurrency on sell order and leaving it until the order is fulfilled. It is already doable because we had done successful trade using this strategy. But still, I is not advisable to leave all our funds in an exchange. We do this because we can afford these coins during the time of order placement since the price of the coins is too cheap and we are hoping that it will moon and fill our sell order.
It's convenient storing on exchanges. It isn't safe I won't do it. The alternative's to download blockchains for every crypto you're saving.
I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.
These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
Okay put 100000 Doge you own on an exchange.
Set 3 sale points
33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents
set it and forget it.
How much Doge would you have now if you did that on FTX? Set 3 sale points
33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents
set it and forget it.
I know some people that are doing exactly that on Binance, and they are not newbies or anything of that sort. Unlike 99% of the people, they fully understand the risk so if Binance goes down they won't blame CZ/US government/whoever but instead only themselves.
I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.
Some to get measly return via staking, some simply due ignorance, thinking that exchanges are sort of banks and that they funds are "safu", some are simply too afraid to hold their own coins and would rather put that responsibility in someone else's hands. Neither of these reasons make any sense, but that's people. What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
Since their "safu" fund is allegedly 1 billion and Binance is in control of tens of billions of dollars, you can imagine what would happen and whether they would be able to reimburse everyone.I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
In the early days bitcoin attracted mostly people who were heavily into privacy, freedom, believed in "be your own bank" thing, but majority of bitcoiners nowadays don't really care about any of those things exepct numbers going up, so this example of yours doesn't surprise me one bit.They store because they want higher exchange rates in future.
And how exactly you get "higher exchange rates" by storing your crypto on the exchange? Exchanges are for trading (exchanging) currencies, not for storing.Okay put 100000 Doge you own on an exchange.
Set 3 sale points
33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents
set it and forget it.
doge was 0.2 cents in 2020
doge peaked at 70 cents in 2021
So the above is doable.
or was possible to do.
At the moment I have Zil on an exchange it is from merge mining etc and zil
I sell all the etc and list the zil at 10 cents 20 cents and 30 cents.
I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges..
First of all I would like to say that there are two types of crypto exchanges one is centralized exchanges and the other is decentralized exchanges. What you mentioned here means I can assume you are talking about using Centralize Exchange. It's true that a big one like FTX whose incident has instilled fear in everyone about centralized exchangers.
However, I think the main reason people store their funds here is the trading and low trading fees, especially when a trader is actively trading while using other hardware wallets or offline, the trading fees are higher. Moreover, other options are also available in centralized exchangers. But for long-term holding, smart traders use offline.
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