Why does Bitcoiner still support the use of centralized exchanges?

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Quote from: BVeyron on June 07, 2023, 02:33:03 PM

Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

This happens because BTC needs adoption. Nearly none of business initiatives accept payments directly in BTC, that's why all the cryptocurrency universe is still highly dependent on fiat banks and exchange hubs. This dependence brings some degree of centralization, but at the current level of adoption crypto to fiat transfers are the only way to use cryptocurrency as money.

Wether bitcoin adoption because globally accepted by government of all countries permitting and accept the use of BTC in doing business like they do with fiat, still a lot of people wouldn't stop the use of centralized exchanges that's because CEX provides a convenient platform for bitcoin traders to do their trading be it spot or features trading, I wonder how many DEX has such features in their platform.

In view of the fact that nearly everyone using bitcoin conceives it as a means to make earnings and grow in profits other than the main vision of Satoshi as means of doing transactions without a third party involvement, and to earn, a bitcoiner has to either hold or trade, hence the odds are that there are more bitcoin traders than holder (some holder even trade too), so much as we trade then the use of centralized exchanges can't be stopped.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

This happens because BTC needs adoption. Nearly none of business initiatives accept payments directly in BTC, that's why all the cryptocurrency universe is still highly dependent on fiat banks and exchange hubs. This dependence brings some degree of centralization, but at the current level of adoption crypto to fiat transfers are the only way to use cryptocurrency as money.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Bitcoins became quite popular in the last few years and attracted a lot of new investors. Especially institutional investors were looking at ways to quickly buy large quantities of crypto coins. Moving large sums of money peer to peer is much harder and requires a lot of work compared to a centralised exchanges. I think that for the average investor who is looking to buy a few hundred USD worth of Bitcoin it's fine to engage in decentralised transactions. But for any larger corporation the advantages are with a big exchange than can quickly process their trades. Even with the scandals we had in the past where an exchange got hacked, or scammed the user out of their money, it's still attractive for many investors. Personally I have uses centralised exchanges regularly in the past and think that security risk is not that big if we regularly withdraw our coins. It makes no sense to leave our funds at the exchange for a long period of time.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Because not everyone cares about security and not everyone has cold storage. Most often, ordinary laziness prompts you to store everything on the stock exchange, that's the whole answer. Not many people care about their funds and when problems happen with exchanges, as it has happened more than once when users remember the main idea of Bitcoin and security.

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Quote from: Falconer on April 28, 2023, 04:11:26 PM

I wouldn't say some people, but the average trader or investor is a user of a centralized exchange even if they don't hold their assets on the exchange. The best advice is to use a suitable centralized exchange, this can help you convert your bitcoins or crypto to fiat and not keep your investment there in the long term.

I don't expect the presence of a centralized exchange to have deprived bitcoiners of complete anonymity as long as they have other exchange options without KYC. So anyone can use and not use centralized exchanges, but they also know that centralized exchanges also played an important role in making bitcoin more popular.

If investors are active in trading but I mean some investors who are holding bitcoin long term and not active in trading, so they don't always use a centralized exchange and automatically they will store bitcoins in a much safer place to avoid problems. Anyone can avoid centralized exchanges that require KYC and choose exchanges that don't require it, but it seems to me when someone decides to use a centralized exchange, only in the trading area instead of keeping assets for the long term in the exchange because we've seen how insecure stored assets can be on a centralized exchange.

It is therefore necessary to take into account when someone uses a centralized exchange and most importantly they understand that to store bitcoins for the long term is not a safe place in a centralized exchange. As has happened on several centralized exchanges in recent years, this reason is sufficient not to store bitcoins on centralized exchanges.

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Quote from: Alpha Marine on April 28, 2023, 01:26:39 PM

I don't see using centralized exchanges as a very bad thing. The problem comes when you leave your money in centralized exchanges. You can use centralized exchanges for just trading but don't leave your your money in a centralized exchange. You can just leave the amount you want to trade so if even you lose it, it won't be much l.

If there is no KYC on these CEXs, you only risk the funds currently held on the exchange. And if there is KYC, then you additionally risk the security of your personal information, and this is very serious. 42 million only of US citizens (which is more than 10% of the country's population) are victims of identity theft per year. Many people underestimate the importance of their personal data and the negative consequences of using this data by fraudsters.

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Quote from: Ale88 on April 28, 2023, 10:27:55 AM

Quote from: jokers10 on April 28, 2023, 03:52:04 AM

with DEX you know exactly what do you risk with

Then why so many people lose everything? Probably YOU know exactly the risks but many others don't. It's like people who wire money to perfect strangers: would you ever do it? I guess not. Everyone should know that, right? And yet, it keeps happening. Never take for granted that people always know what they're doing, you just need a second of distraction and even an expert can make a mistake, shit just happens.

Right, and the same can happen with the CES as well, can't it? But CEX has much more underwater stones. Some people if they are not cautious enough will lose their money anyway and we can just warn them about possible problems. Their decisions they make themselves.

When someone starts using a trustless currency like bitcoin we should warn him that all transactions are irreversible, that entire control over his money are on him what means that all risks are on him as well. It is not very simple, I understand, but if to use a decentralized currency people should learn that. Otherwise there is a fiat system they still can use.

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Quote from: nurilham on April 28, 2023, 04:31:50 PM

As long as CEX has advantages for Bitcoiners, they will always support CEX. CEX offers more comfortable places for trading coins, there are varied features as well. While in DEX, the features are more limited and sometimes they have no big volumes for transactions of certain coins, too. So, Bitcoiners prefers to use CEX over DEX in some cases.

Huh? Do you think Bitcoiner supports Centralized Exchanges? I don't think so. Yes, Bitcoiners use Centralized exchanges because sometimes you may need cash, and you can use Centralized exchanges to sell your coins. At least I only use Centralized exchanges to sell my coins and cash out them. I never use centralized exchanges for any other purposes. I use Decentralized exchanges if I need to exchange Bitcoin for any other currencies. I won't say Bitcoiners support Centralized exchanges. They use them for emergency purposes only.

Quote from: nurilham on April 28, 2023, 04:31:50 PM

People know that CEX is riskier to be a place for storing coins for a long time.

There we go again. Not only for a long time. I won't suggest anyone hold their coins on exchanges for a day. You don't know when the desired day will come. Not only centralized exchanges but also decentralized exchanges. I mean, why would you hold your coins on exchanges while you can keep them in your self-custodial wallet? You cannot control them when you keep them in an exchange. They are not in your hands. Their service could be unavailable to you anytime. I don't see any point in holding your coins in exchanges. I never suggest doing it. Use your wallet to store your coins. Not your keys, Not your coins!

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As long as CEX has advantages for Bitcoiners, they will always support CEX. CEX offers more comfortable places for trading coins, there are varied features as well. While in DEX, the features are more limited and sometimes they have no big volumes for transactions of certain coins, too. So, Bitcoiners prefers to use CEX over DEX in some cases.

However, for keeping BTC or altcoins, many people avoid CEX now. People know that CEX is riskier to be a place for storing coins for a long time.

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Quote from: lizarder on April 28, 2023, 01:19:24 PM

Some people still use centralized exchanges for transactions made in bitcoin, but that doesn't mean they don't understand the principles of bitcoin and there are still many people who currently store bitcoin in wallets that are much more secure and not everyone stores bitcoin in centralized exchanges. Centralized exchanges are only used when they are trying to make transactions, whether small amounts or larger amounts.

While in my case it's possible to use a centralized exchange only when I want to make a transaction, the exchange I use is usually licensed to operate in the country where I live, but I don't hold bitcoins on a centralized exchange either in the short or long term.

I wouldn't say some people, but the average trader or investor is a user of a centralized exchange even if they don't hold their assets on the exchange. The best advice is to use a suitable centralized exchange, this can help you convert your bitcoins or crypto to fiat and not keep your investment there in the long term.

I don't expect the presence of a centralized exchange to have deprived bitcoiners of complete anonymity as long as they have other exchange options without KYC. So anyone can use and not use centralized exchanges, but they also know that centralized exchanges also played an important role in making bitcoin more popular.

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For now I think why some Bitconers still supports centralized exchanges is due to the fact that CEX are really helping out in the quick adoption of Bitcoin across the globe, and it has made Bitcoin become more accessible to people who wants to trade, invest and own some portion of Bitcoin. So, in order for Bitcoin to reach its destination point successfully, Centralized exchanges has a role here to play through its P2P method which helps people to convert their fiat into Bitcoin.
Too some people feels that saving their crypto in centralized exchanges is less stressful to them , as they have no need to wory much about securing their seeds phrases and forgetting that not your keys not your crypto.

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Quote from: BlackHatCoiner on April 28, 2023, 11:31:52 AM

Quote from: Ale88 on April 28, 2023, 11:17:36 AM

I'm saying that in general, when you're "out into the wild", it takes just one little mistake and potentially you can lose everything.

Not if you take the time to learn from the experts. Sure, if you have no idea what you're doing, and you're following random articles / tutorials without further research, and you put serious amounts of money in that, at some point you might lose everything. But that would be obtuse and irresponsible. Buy things you understand.

All the things you're saying make totally sense in an ideal world, and unfortunately that's not the world we live in otherwise many things wouldn't keep happening over and over again, and I'm not talking only about crypto. The majority of people are lazy and are not interested in learning new things, that's how other people keep taking advantage of them. Of course you can say it's their fault but then you probably lost that person forever.

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@OP, the reason behind that is the fact that Bitcoin is being valued in terms of fiat. Fiat itself is centralized, so we need alternatives that allow us to go for P2P and use those alternatives as escrow (here: centralised exchanges like Binance). However, nowadays I'm also aware of the fact that people are being screwed for using these P2P as they're suffering from chargebacks and even bank account freeze scams.
I also know that we all hate providing KYC when we talk about privacy and decentralisation, but at some point it's for our own good and that's where these exchanges help us out whenever we get stuck in those scams.
Till we can't transact BTC for its own value (not in fiat, but giving BTC a different value for its usage which isn't possible because we all are here for profits through speculation), I don't think Dexes will take over.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them?

Its not like they don't want to support the true value cores of bitcoin, its just that to survive in this game they need external influence which means being regulated and enjoying other perks...besides having to support the likes of visa or MasterCard was always going to point in the direction of centralization as its the only way to protect the merchants and customers.

Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Like i said, centralization has more perks than been decentralized, it opens up to more buying power, opens up a wide range of coins unlike decentralized exchanges that can only operate with a few select coins.

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Quote from: Alpha Marine on April 28, 2023, 01:26:39 PM

I don't see using centralized exchanges as a very bad thing. The problem comes when you leave your money in centralized exchanges. You can use centralized exchanges for just trading but don't leave your your money in a centralized exchange. You can just leave the amount you want to trade so if even you lose it, it won't be much l.

Same here, centralized exchanges are created to serve users and to have easier access to trade cryptocurrency. The only mistake users have is that they use these exchanges as stash to save their cryptocurrency. It is not the exchange's fault but the user's fault of trusting the exchange platform too much.

Aside from that without these centralized exchanges, the proliferation of cryptocurrency will not be fast. Cryptocurrency exchanges are one of the major contributors when it comes to cryptocurrency adoption and information dissemination. Without these centralized cryptocurrencies, I do not think we will have this kind of adoption level.

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Quote from: Ale88 on April 28, 2023, 10:27:55 AM

Quote from: jokers10 on April 28, 2023, 03:52:04 AM

with DEX you know exactly what do you risk with

Then why so many people lose everything? Probably YOU know exactly the risks but many others don't. It's like people who wire money to perfect strangers: would you ever do it? I guess not. Everyone should know that, right? And yet, it keeps happening. Never take for granted that people always know what they're doing, you just need a second of distraction and even an expert can make a mistake, shit just happens.

Well, that's one of the downsides of using DEX. Anything can happen especially mistakes because we are only human beings bound to make some mistakes, but what if that certain mistake is just too much to carry with like sending some huge funds but to a wrong address? What I'm trying to say is that DEX is indeed a good exchange to use especially if we wanted anonymity but regarding about making some mistakes, I think it's still good to use CEX just in-case.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Not all people who has bitcoin are inclining the bitcoin characteristics on how they use it. Most of the people who has bitcoin today treat bitcoin as an investment and doesn't really care how bitcoin really works. As long as they have profits and they are still earning, they will continue to have bitcoin. I'm sure they won't use a decentralized exchange because of the fees that they hate, Instead they will just rely on the centralized exchange that has a massive fee differences. It's a hard to swallow pill that centralized exchange is part of crypto and it definitely has it's part on the growth of majority of the cryptocurrency. I don't think that centralized exchanges will become obsolete in the near future.

Alpha Marine

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I don't see using centralized exchanges as a very bad thing. The problem comes when you leave your money in centralized exchanges. You can use centralized exchanges for just trading but don't leave your your money in a centralized exchange. You can just leave the amount you want to trade so if even you lose it, it won't be much l.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

most of those who still use centralized exchanges are those who trade. they use, but I'm not sure they still keep their Bitcoins in a centralized exchange. the experience has served as a warning to anyone not to keep their Bitcoins on exchanges, or to do so at their own risk.
some people know Bitcoin from trading, even centralized exchanges that make marketing on social media. the brand campaigns for crypto trading as a whole, not a benefit from the use and ownership of Bitcoin assets alone.

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Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom.

It is these advantages that make people can trust bitcoin easily and today we have not determined any other form of investment that is more perfect than bitcoin, despite the magnitude of the risks posed by its price fluctuations.

What most people expect from an investment that is run, decentralization and freedom and these two things are the basic considerations that make people make decisions in bitcoin.

Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them?

Utilization will decide something according to its use, there are many reasons why people still act outside of conflicting principles as you mentioned.

Quote from: Abu-Naim on April 22, 2023, 01:09:24 AM

Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Some people still use centralized exchanges for transactions made in bitcoin, but that doesn't mean they don't understand the principles of bitcoin and there are still many people who currently store bitcoin in wallets that are much more secure and not everyone stores bitcoin in centralized exchanges. Centralized exchanges are only used when they are trying to make transactions, whether small amounts or larger amounts.

While in my case it's possible to use a centralized exchange only when I want to make a transaction, the exchange I use is usually licensed to operate in the country where I live, but I don't hold bitcoins on a centralized exchange either in the short or long term.

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