Why is cold storage better than coinbase?

Khaos77

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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.

Coinbase only insures the % , they have in hot wallets, which is ~2% of the total they control.
The rest is in cold wallets that , that are not insured.

If you store funds with Coinbase, you are trusting their people to keep the coins secure.
If you keep your own wallet, they you are trusting yourself to keep the coins secure.

The problem is , most people, are not ready for a fire , flood, or even a simple thief that gains physical access to their home.
They may not even be ready if the hardware wallet fails. Or they may store their recovery phrase in a easy place for a criminal to discover.

You take risks either way, your decision is deciding whom do you think is going to better protect your coins in the long run.

* Not to mention if you die unexpectedly, your children can probably get access to your coins on coinbase by using your will and a court order,
while a cold wallet, where no one but you has access will be lost to them. *

Shasha80

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Because online platforms are very prone to being hacked, there is evidence that there is an increasing number of exchanges and online wallets
that have been hacked. Moreover, online platforms like Coinbase, they store the user's private keys and at any time the user's account can be frozen,
so we don't fully have power over the coins we have. In contrast to hardware wallets as long as we keep our own private keys, and of course our
private keys are stored in a safe place. No need to worry about our hardware wallets, if they are damaged and burned. As long as we have the private
key is very safe, because it can perform recovery.

acener

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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.

We want privacy for our own that is why some of us are here in crypto and also you should know that "Not your Keys, Not your Coin" .
You could use whatever platform or wallet you want but always remember those words you don't have total control on your crypto and they are monitoring every transaction that you would have.
And not to mention that if we would have some fork in BTC you wouldn't get your reward in those centralized wallet like coinbase.

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Quote from: SmokerFace on February 23, 2021, 10:58:53 PM

For me, it's better to have strong privacy than paying the high transaction fee. Security always matters and cold storage win in that regards. I have a great experience with both wallets and I personally think that cold storage is more reliable in term of high security. Many exchanging are now getting hacks, and stolen the bitcoins is now easy because of less security of wallets

It has been said and we've got different good experiences about hardware wallets. In all of the time that I've used a hardware wallet, I didn't have any worry that my funds would be unsafe. The feeling of being secured is at best with hardware wallet. Whilst in exchanges or online wallets with Coinbase, soon you'll feel what we feel about keeping there as an unsafe place for your money. Several people have told you the importance of owning and holding your private keys.

bakasabo

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Cold storage wallet wont send you one day an update of terms of service, saying that starting from next month they will charge you extra fees for something. Or you wont face the fact that transaction service fee will be doubled.

Cold storage wont even produce a peep sound if you receive unusually huge amount of funds and will ask you to explain their origin.

Cold storage user will never be in situation, when third party sends a claim due to that all companies funds are frozen and are under investigation.

Rehan Zakir

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Cold storage means that Hardware Wallets.
Hardware wallets are offline wallets and keeping Bitcoins are safe in it. Because they are offline and no one can access it. Online wallets such as coinbase, hackers can easily access these wallets. But coinbase wallet has secured with multiple security layers. Hackers have to break all the security layers to access anyone wallet. They set these security layers to protect users wallets from Hackers

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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.

When you create paper wallet or hard-copy wallet backups, you normally create multiple copies and keep them in different locations. So even if your house burns down, you won't lose the access to your coins. However, there is a chance of it getting stolen and precautions need to be taken to prevent such a scenario. Coinbase on the other hand is not very trustworthy. They have close down user accounts and frozen the coins from time to time for silly reasons.

SmokerFace

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For me, it's better to have strong privacy than paying the high transaction fee. Security always matters and cold storage win in that regards. I have a great experience with both wallets and I personally think that cold storage is more reliable in term of high security. Many exchanging are now getting hacks, and stolen the bitcoins is now easy because of less security of wallets

Altcoinsintel

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Having a middleman was against the very idea of Bitcoin. Transactions should be P2P as it was intented any other way makes someone else control your money and authorize your transactions. PayPal, Coinbase and anything that acts as a third party just makes Bitcoin worthless and no different.

Since this is becoming the new norm then why not make it completely centralized then?

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Quote from: rokon1234 on January 18, 2021, 12:48:45 AM

Cold hardware wallet is much trusted and secured than coinbase or other online wallet.because, online wallet have chance to hack or ban account.so, i think everyone should choice cold hardware wallet for better safety.

Yep I only use online wallets as a hot wallet. So to make small payments with.

I never had that much money in it because of your reason. It can be hacked or banned. Even there is a change that they run into other problems like hosting.

rokon1234

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Cold hardware wallet is much trusted and secured than coinbase or other online wallet.because, online wallet have chance to hack or ban account.so, i think everyone should choice cold hardware wallet for better safety.

Rasel5209

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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.

Cold hardware wallet don't possible to hack cause you can keep it without online. But coinbase is online so you will be hack.

Garant581

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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.

I did not know about insurance before, but I myself kept the cryptocurrency in the cold Trezor wallet, because I always believed that there was no way to get to it. It's funny that practically without dealing with cryptocurrency for 1.5 years, I even forgot how to create a bitcoin wallet ... Today it was a serious task for me!))

momchilandonov

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Coinbase can ban any account. You dont have private keys for your accounts on exchange. However, if you know your seed phrase, you can use any wallet as you want and your money is truly yours

imstillthebest

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your not new owning a btc but your new on learning it ? How was that possible and your lucky if you didn't loose most of your btc because of lack of knowledge .

Learning should come first before trying or you can do them together ,

you can own a btc and at the same time learn by doing research and try to increase your btc knowledge every single day and if you do that before , you will not came up with this question because you already know the important or the difference between the two kinds of wallets .

sujanpatil

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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.

Cold storage is the safest wallet. Because they are decentralized. Full control is in your hands. Online theft is less likely. If the wallet is damaged, the recovery seed can recover it. If you want to work, you can work by connecting to the computer. Now the topic is recovery word so you can keep it safe in the cloud. wallel means it must be kept in safe. The other thing is that you have to buy them.

Hippocrypto

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Quote from: acener on January 02, 2021, 02:08:14 AM

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.

The easiest and best answer would be "Not your keys, Not your coin" .
It is safer in the cold storage rather than online or mobile wallet which could be hack when your phone is infected with virus.
We have back up keys so we could recover what's inside the wallet if the device ends up being misplaced.

Online or mobile wallets had also a back-up keys which you can use as a backup, so it's not a big deal if either cold wallet or other else will be used. That always depends on your comfort or easy access on your funds. Most importantly, you're securing all the best options on how to manage your asset security. Nature calamity or any device potential loss is always possible, don't ignore those ideas and always think of some presumptions.

acener

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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.

The easiest and best answer would be "Not your keys, Not your coin" .
It is safer in the cold storage rather than online or mobile wallet which could be hack when your phone is infected with virus.
We have back up keys so we could recover what's inside the wallet if the device ends up being misplaced.

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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.

One of the vital points to note down before venturing into the crypto space is that, once you are not in control of your private keys then that funds or assets does not belong to you because, you will have limited control over it and your funds can also be frozen. The reason why cold storage or hardware wallets are better is that, you assume 100% contorl of your funds, because you have the private keys and so far your keys are safe, you are secured but same cannot be said of online platforms or exchanges be it Coinbase or whatever, because if a security breach happens, you will be on your own in fact you will be reminded of the terms and conditions you agreed to which includes the risks associated with trading cryptocurrencies. Also, it is not an annoying question, it is good you asked and get enlightened hence taking every security caution. Lastly, many exchanges has been hacked and funds lost, even if the exchange want to refund, I don't think all will be refunded.

alexeev.tosha0109@yandex.

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Not your keys, not your coins. If you use cold wallets, you can be sure that no one has an acces to your funds. Storing crypto on exchanges means that you don't really own your private keys. Even non-custodial mobile wallets, for example Guarda, Lumi or Ownr, are better alternatives to using exchanges as a crypto wallet.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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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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.

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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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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.

No, you still have unsure answer if Coinbase is hacked. They can reason that all funds were stolen by the hacker. It's best to keep your bitcoins alone, on a hardware wallet. What you only need to keep are those recovery seeds, other than that when you're accessing the wallet, you'll be asked to confirm your withdrawals or addresses for deposit which you need to do and be done on the hardware wallet. You don't own your private keys in Coinbase and you don't have control over it.

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All I know is, if you store your coins in coinbase, you don't have access to your private keys of your wallet. It is coinbase that has access to it. This means that you actually don't own the coins. Again, coinbase is centralized. This means if coinbase gets taken down, you might lose all your coins. Again, if your coinbase account isn't secured enough, and if your email gets hacked, chances of your coinbase account getting compromised is high. So many reasons why you should avoid coinbase if you wish to store coins for long term.

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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.

To make it easy and simple I like to tell people it is more safer to have your coins in my possession in my lock box then it is to keep them on a exchange. This way I know my keys are in my possession and not someone else.

Even if I could someway lose my hard wallet in my lock box there is a better chance of a platform like Coinbase going down for long periods of time as happened many times in the past.

The platforms are insured like you say but it will still be a horrible process I think to go through a hassle to recover coins that were lost or hacked. It is okay to store some coins in a exchange in my opinion but only some and not all of them.

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OP, check out: https://NotYourKeys.org/

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Quite simple: Not your private key's? Not your coins!

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You can't really trust online platform no matter how they promise to be secure. Who knows when something bad happens and they back out of their deal. Sure storing with yourself seems risky but if you do store it properly the chances of it being destroyed are pretty slim. I read a guide that allowed me to properly store my bitcoin, here https://mycryptoparadise.com/best-bitcoin-wallet-to-use-in-2020/

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

Quote from: Lorence.xD on December 31, 2020, 12:15:26 AM

Cold storage is not prone to attacks online, the only risk of security for cold wallets is that it is physically stolen from you. Unlike Coinbase which locks some users accounts, you can access your funds anytime. You have to watchful because cold wallet are far more inconvenient when you are trading.

I understand that the online platforms are prone to cyber attacks but doesn’t the FDIC insurance make that a non issue? The frozen accounts thing is concerning. I wonder the reason?

Every person who has bitcoin will know where they can store their bitcoin, whether they will use online platforms or cold storage or a temporary wallet. I am not sure if the FDIC insurance can help them get their funds back once their account gets hacked by the cyber attacks. If that is our money, we need to know how to store the funds in a safe wallet, and we do not have to use the third party services, especially not using the online platforms because we do not know if they can always protect their member accounts or not in the future.

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

I understand that the online platforms are prone to cyber attacks but doesn’t the FDIC insurance make that a non issue?

Coins at Coinbase are not FDIC insured, only fiat can be insured up to $250k this way.

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

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

The reason is whatever they think a reason might be to do so.

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Quote from: harrylime on December 31, 2020, 12:42:37 AM

I was under the impression that just your USD FIAT CASH was FDIC insured on Coinbase.

This is true for FDIC insurance, as digital currencies are not legal tenders, but there is an insurance for digital currencies stored in coinbase (hot wallet) and lost as a result of a breach in their security.

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

I understand that the online platforms are prone to cyber attacks but doesn’t the FDIC insurance make that a non issue? The frozen accounts thing is concerning. I wonder the reason?

A breach is not the only risk when storing on an exchange, your funds are not under your control as such, you only spend them when the exchange allows you too. They can be frozen at any time *pending any investigation.
Also, there is a privacy concern, as exchanges require you to pass KYC to transact in certain amounts. Coinbase in particular has been known to submit user details to government agencies to help blockchain analysis. This removes the pseudo anonymity in Bitcoin.

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

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.

Your Bitcoins are in your address and not stored on your 'wallet', so you can always recover it if anything happens to your device, as long as you backup your seed phrase.
Creating multiple backups and storing in safe locations is a prerequisite for security.

Maus0728

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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.

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Cold wallet always I prefer because short wallet somewhere is risky to hold our assets and cold wallet is offline since we not been use. So I prefer cold wallet to use..

harrylime

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I was under the impression that just your USD FIAT CASH was FDIC insured on Coinbase.

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Quote from: Lorence.xD on December 31, 2020, 12:15:26 AM

Cold storage is not prone to attacks online, the only risk of security for cold wallets is that it is physically stolen from you. Unlike Coinbase which locks some users accounts, you can access your funds anytime. You have to watchful because cold wallet are far more inconvenient when you are trading.

I understand that the online platforms are prone to cyber attacks but doesn’t the FDIC insurance make that a non issue? The frozen accounts thing is concerning. I wonder the reason?

Lorence.xD

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Cold storage is not prone to attacks online, the only risk of security for cold wallets is that it is physically stolen from you. Unlike Coinbase which locks some users accounts, you can access your funds anytime. You have to watchful because cold wallet are far more inconvenient when you are trading.

Doubleflip7

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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.

Topic: Why is cold storage better than coinbase? (Read 920 times)