Why is cold storage better than coinbase? - page 2.

ranman09

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Quote from: Maus0728 on December 31, 2020, 12:50:52 AM

Pretty simple. It's because you have the full authority to your coins. Hence the saying "Not your keys not your bitcoin". Using non-custodial has the possibility to lock or suspend your account for whatever reason. To some extent, aside from considering the security part of your holdings, people are using hardware wallet or even creating their own air-gapped device to improve not just the security but also the privacy of their holdings which is a missing factor in most of the exchange.

But still, putting much of your holdings on a centralized exchange is a big NO since it defeats the purpose bitcoin in the first place. You don't want your wealth to be controlled by banks isn't it? Then you should take a bit of effort to secure your money from intermediaries.

I agree. I would be saving most of my bitcoins on a cold hardware wallet and have some on exchanges for quick trades and maybe some quick cash too. This way if these exchanges would experience emergency things, I will not have my money locked down.

ranochigo

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Quote from: Doubleflip7 on December 31, 2020, 05:17:05 PM

Thank you all for the thorough replies! I’m sold on cold storage now. I just purchased the Ledger Nano S.

Hardware wallets are not cold storage, though my take is that they provide roughly the same level of security and I would recommend hardware wallets over cold storage for newbies.

I think the important distinction is that suppose any thing were to happen with your CoinBase account, for example malware attacks on your part and the coins got out of the account, they're not liable for the losses because the negligence is on you. It will not insure you for most attacks but rather, it'll insure you if THEY lose the funds. That makes it nowhere as beneficial a HW wallet/cold storage.

A62662

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Every exchange can be hacked, so can your own wallet, but then it will be totally your own fault. In that regard cold storage is much better than Coinbase. Or any other exchange for that matter.

dre1982

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Well always be sure that you are the owner of the keys and not an external like coinbase. Just be sure you got the rights back-ups and you will be much safer then on sites as xoinbase.

BitcoinPanther

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Quote from: Doubleflip7 on December 31, 2020, 12:10:32 AM

It seems most bitcoiners prefer cold hardware wallets over online platforms but why is that? Considering platforms like coinbase are FDIC insured and have the best security in the business, it seems much riskier to try to secure my bitcoins on my own. I feel my house burning down or some other accident destroying my wallet is much more likely than losing it on Coinbase. And if there is a breach in coinbase, I get it back... so what am I missing?? While I’m not new to owning bitcoin, I am new to learning about it. So I apologize if this is an annoying newb question.

There is no much better than holding your own funds. Remember not your key not your coins. Though I see you have your worries, I think it is best to educate yourself first on how to secure your own wallet, but before then I think it is ok to use coinbase until such time you gained enough knowledge on securing your own wallet.

Lucius

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Quote from: Doubleflip7 on December 31, 2020, 05:17:05 PM

Thank you all for the thorough replies! I’m sold on cold storage now. I just purchased the Ledger Nano S.

Let’s say most hardware wallets will give you much better security than any custodial wallet which is actually a crypto bank that has partially secured funds, and besides, you are not using the full potential that Bitcoin offers you - and that is to be your own bank.

I would just correct you about calling a hardware wallet a "cold storage", because every crypto wallet that has contact with the Internet can't fall into that category. To understand what cold storage is, visit this link Cold Storage.

Also, don't be fooled that with the purchase of such a device all problems and challenges with the security of cryptocurrencies disappear - you must take the issue of backup very seriously (24 words) and always be careful when sending and receiving transactions (check if all information matches on the computer and hardware device screen).

It may be too late now, but everyone should be very careful with their personal information when buying such devices.

7788bitcoin

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Quote from: Doubleflip7 on December 31, 2020, 12:10:32 AM

It seems most bitcoiners prefer cold hardware wallets over online platforms but why is that? Considering platforms like coinbase are FDIC insured and have the best security in the business, it seems much riskier to try to secure my bitcoins on my own. I feel my house burning down or some other accident destroying my wallet is much more likely than losing it on Coinbase. And if there is a breach in coinbase, I get it back...

I understand what you are saying but coinbase does not say that they will guarantee everything and it will have certain limits, FDIC insurance has a limit of $250,000 and from what i understand that covers only US citizens and if you not from US you will not be having the so called FDIC protection.

The options is yours whether to take that kind of risk, as the saying goes, if you are not holding the coins in your own wallet then it is not your coins. Consider these limitations when taking these kind of risk.

ethereumhunter

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Quote from: Doubleflip7 on December 31, 2020, 05:17:05 PM

Thank you all for the thorough replies! I’m sold on cold storage now. I just purchased the Ledger Nano S.

Good choice for you. Well, congratulations, now you do not have to worry if your wallet will be hacked because you have full control of your wallet. Do not forget to make a backup of the private keys, password and else, so you can recover the wallet if something bad happens. Take care of your wallet and do not tell others if you have crypto inside the wallet.

BlackHatCoiner

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Even if OP has already got enough replies, I'll answer that. The bitcoin philosophy tells you that you have to trust no one to keep your funds. You can be the owner of funds without having to trust a bank, or an exchange. The need of trust abuses the users, since it can manipulate them. Not to mention that centralized entities can be hacked and all of your money will be gone too.

Using non-custodian wallets, require only your common sense to transact your funds. And they help you on both anonymity and privacy. Be your own bank. Trust none.

hd49728

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Not your keys, not your coins!

Quote from: dothebeats on December 31, 2020, 05:30:21 PM

Preferences. Plus, Coinbase can technically pull up a ‘this is our bitcoins, not yours’ move since there isn’t any documentation apart from your account that you ‘own’ those coins. I’m not saying that they will do this but the possibility of that happening is always there.

Prevention is better than cure. If there is possibility for loss, it makes sense to try other alternatives. I got your points that Coinbase is a big platform and has good reputation so they won't want to destroy their years-building reputation by stupid actions.

Quote

Also, as most people always say: not your keys, not your bitcoin. I’d rather keep the funds in my possession and let it be lost from my own mistakes rather than having to go through all the legal hoops and frustration if my coins in an online platform was lost or stolen.

It is as there are non-custodial wallets to store cryptocurrency, get full control on private keys, transaction fees and protect privacy or increase anonymity.

dothebeats

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Preferences. Plus, Coinbase can technically pull up a ‘this is our bitcoins, not yours’ move since there isn’t any documentation apart from your account that you ‘own’ those coins. I’m not saying that they will do this but the possibility of that happening is always there. Also, as most people always say: not your keys, not your bitcoin. I’d rather keep the funds in my possession and let it be lost from my own mistakes rather than having to go through all the legal hoops and frustration if my coins in an online platform was lost or stolen.

Also, the problem may not be on Coinbase itself but on the way you handle your logins and whatnot. There are always weak links when it comes to online accounts.

Doubleflip7

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Thank you all for the thorough replies! I’m sold on cold storage now. I just purchased the Ledger Nano S.

MCobian

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I prefer cold storage because it is safer than storing my Bitcoin on Coinbase. Because I keep the private keys myself, it means that no one
else can access my Bitcoin. Compared to if I store it on Coinbase, we have no privacy and do not fully control our Bitcoin. Besides, I think
there is a high chance that Coinbase can be hacked, while I can store cold storage in a safe place. Like in a safety box at the bank.

Twinkledoe

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Quote from: hatshepsut93 on December 31, 2020, 10:38:26 AM

Online wallets can be hacked just like self-hosted wallets. There's malware that hijacks sessions, logs your passwords, there's sim swapping, email hacks, etc. Since you access Coinbase on an online machine, the risk of such hack is much higher than with cold storage, which is designed to minimize the chance of hacks.

Then there are counterparty risks. Any centralized exchange could pull an exit scam, get hacked, get seized by authorities, etc.

Quote from: Doubleflip7 on December 31, 2020, 12:24:09 AM

The frozen accounts thing is concerning. I wonder the reason?

There can be many reasons, generally financial institutions are allowed to freeze assets if they deem your account suspicious - there's no strict rules here.

And they can freeze your account for whatever reason they deem is appropriate. Even if sometimes you are not breaking any condition from their ToS. They can always say your account is suspicious, they have the privilege to label your account as such. So clearly, having your coins in your cold storage is way way better than storing it to centralized platforms.

hatshepsut93

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Online wallets can be hacked just like self-hosted wallets. There's malware that hijacks sessions, logs your passwords, there's sim swapping, email hacks, etc. Since you access Coinbase on an online machine, the risk of such hack is much higher than with cold storage, which is designed to minimize the chance of hacks.

Then there are counterparty risks. Any centralized exchange could pull an exit scam, get hacked, get seized by authorities, etc.

Quote from: Doubleflip7 on December 31, 2020, 12:24:09 AM

The frozen accounts thing is concerning. I wonder the reason?

There can be many reasons, generally financial institutions are allowed to freeze assets if they deem your account suspicious - there's no strict rules here.

Oshosondy

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Cold wallet is the security while coinbase is the privacy invading, not only coinbase is the privacy invading wallet but many other wallets that are custodial and require verification to be fully functional. Aside privacy invasion, also is the inconveniences custodial wallet can pose, there are many coinbase users that says their account was blocked, freezed and some complains like that, cold wallets are noncustodial which means privacy. Not only that but also it stores private keys offline, while something offline will be hard to be known to hackers. For any recommendation, coinbase should not be there.

hd49728

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Not your keys, not your coins!

Cold storage is the best is bitcoin will be store offline. Exchanges have many hacks and since 2018, they changed to move from hot wallets to cold wallets, from single signature to multi-signature wallets.

"Not your keys, not your coins" so let consider a non-custodial wallet for your bitcoin. Bitcoin core, and Electrum are one of top non-custodial wallets.

If you don't want to disclose your bitcoin address, you can create a wallet with Electrum when your computer is offline. Save a receiving address and make deposits to that address from another wallet of yours.

If you care about privacy, you need to use Tor browser when you check that deposit transaction or that wallet.

raidarksword

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Offline wallets are much safer than centralized wallet like coinbase wherein it's prone for a cyber attack and we all know no security protocols are safe from hackers and no system is impenetrable is not possible to them. One thing about cold wallets that you have the full control of your assets and private keys, you just have to keep it in the safe place away from thieves.

davis196

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Quote from: Doubleflip7 on December 31, 2020, 12:10:32 AM

It seems most bitcoiners prefer cold hardware wallets over online platforms but why is that? Considering platforms like coinbase are FDIC insured and have the best security in the business, it seems much riskier to try to secure my bitcoins on my own. I feel my house burning down or some other accident destroying my wallet is much more likely than losing it on Coinbase. And if there is a breach in coinbase, I get it back... so what am I missing?? While I’m not new to owning bitcoin, I am new to learning about it. So I apologize if this is an annoying newb question.

If you are so afraid of your house burning down,why don't you just put your cold wallet in safe deposit box in a bank.
If you are still afraid,just buy an insurance policy for your BTC from an insurance company(even though I don't think that they provide such insurance products right now,they might start going this in the future).
In conclusion,there's no 100% safety for your Bitcoins anywhere,but it's still way better to keep your coins and your private keys in your house,instead of relying on the mercy of some big corporation.

shoreno

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its just a matter of choice @op . you already state your reason why you feel or why you think that coinbase is safer than a cold/offline storage so what are you waiting for ? just do it and just go for it .

i believe that there are alots of people that are like you that also prefer online wallets but they dont have a reason like you . infact i use online wallet too , the one where i dont hold my keys but its not coinbase , i have a bad history with that wallet .

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