Topic: Why use decentralized bitcoin in a centralized way? (Read 586 times)

Unfortunately Bitcoin is not Turing complete, the instructions it is able to execute are very basic, so it can't be used to create sophisticated smart contracts like EVM cryptos. It means you can't use this crypto for Web3 dapps, DEX or DAO. So for any advanced use cases, you will need to deal with centralized platforms unfortunately. BTC is designed for very basic payment transactions, this makes it reliable and robust but it comes with drawbacks and limitations sadly. That's why some people consider it as a good cryptocurrency for payments and value transfers, but not as a good technology for future evolved use cases.

Where are the regulations that forbid to use no KYC P2P and DEX? if you mean in your country, it's no problem to post the documents here. I just want to see if your government really blacklist unregulated sites usage instead of making own assumption.

What's the risk in DEX, what issue that happened in DEX and didn't resolved immediately? please make sure it's a real DEX, not fake DEXs e.g. Uniswap, Sushiswap, dYdX or any other swap platform that claimed to be DEX.

I have noticed this and quite often the reason for traders to behave this way is that they do not want to spend additional money each day on fees, and they also do not want to have to wait for a few minutes or hours to get a transaction confirmed.

As if they did this then they may miss a movement on the market, but the trade off is that by keeping their coins in a CEX they are risking that the exchange may scam them, go bankrupt or get hacked, events that while in theory should be rare, they are common on this market.

It's very simple: in decentralization, we have full control over the bitcoin or crypto assets that we will buy, while in a centralized-based system, we don't. That does not mean that it is not good to choose a centralized-based system; of course, that is not what we want to say.

There are also instances where CEX does not have the Dex platform, like p2p features most of the time. When CEX is reputed, it is also good, especially if there is a big issue that is resolved immediately, unlike DEX, where the risk is a bit higher compared to CEX. This is just my idea and what I know about it.

You can’t hold your coins in a decentralized exchange. I mean; you’re the one who holds it, but you say it like it has to be in the “exchange”. Using  decentralized exchange is simply connecting your wallet so you can make trades. Also, it’s best to have a wallet for this. So you can connect and disconnect safely, and you only send the asset you want to trade at the time you’re trading it. I don’t find it wise to use a wallet with too many assets and trade directly.

Bitcoin bank; centralized bank to store your bitcoins.

It's as easy as pressing the withdraw button on that exchange. No, seriously.

The price you pay is the due diligence you did or did not do. Learn how to securely use a hardware wallet.

I can understand that, but there are also p2p exchanges that you can use, and in them you do not have to submit kyc, they don't harvest data like centralized exchanges. The crazy part of it all is that some people do not only trade in centralized exchanges, but they also store their funds in such custodial platforms, and that is what i think is the worst of all, even if you trade in centralized exchanges, you should do well to move your money into your self custody after you are done.

Government regulations are always in favour of the government. I still believe decentralization is the best way we can have greater financial control over our assets. From the replies so far, it is clear that not everyone will be willing to use bitcoin the decentralized way, this isn't supposed to be a problem as their decision doesn't stop the next person from using bitcoin the way it pleases him.

Regulation is main reason but some other factors like limited noKYC exchanges, DEX and their lower trading volume as well as less trading pairs and barrier to switch fund from Bitcoin to other cryptocurrencies are other reasons.

Bitcoin maximalists will not care about altcoins and they can feel fine with DEX, no KYC exchanges. Majority of the crowd do mixed actions with Bitcoin and altcoins then any exchange, KYC or no KYC, will not be their favorite if they can not be given different pairs to switch fund around.

Now, it is favorite and personal choice but in future, with more regulations on KYC and DEX, what will we have?

We use decentralized Bitcoin in a centralized way because we cannot use exchanges that are compliant to the local laws due to the regulations being implemented so we are forced to do KYC as we are using their services and that us how I think it works.

Never makes sense to me when I see people using bitcoin in a centralized way.

Why are you letting cashapp hold most of your btc?
Why are you letting FTX hold most of your btc?

Where is your ledger?

Self-custody is a right for everyone, but no one said it was easy. It takes practice, consistency, routine, time management, and above all else mental clarity.

Honestly there's nothing wrong to hold your coins in decentralized exchange, but make sure it's a real decentralized exchange in the first place!

The real decentralized exchange is bisq, it's better to hold there rather than hold in centralized exchange. Bisq has no central server, even government shutdown the site, we can still access our wallet and the exchange.

And wait... what's exactly "Bitcoin bank"?

I am not sure of them going bankrupt. Unless mismanaged, they should be making huge amount of money. For instance, Binance has made a lot of money so much that they do charity. They charge fees for trades and transfer and some listings and many other things. So, they may not go bankrupt for people to learn better. Issues that can make them learn better may be being locked out of your account probably because of server issue or any technical error. Then maybe they will probably see why it’s best to manage their assets themselves.

Yes it is that simple, but most bitcoin owners today prefer to use centralized exchanges to store their assets because the purpose is to trade, the few people who may have touched decentralization are those who are already well informed about bitcoin itself, and old investors will definitely use wallets that they constrain themselves, unlike new investors who will definitely use CEX to store their bitcoin and like bitcoin Spot ETFs, they trust their bitcoin to third parties rather than themselves because they may not understand how decentralized bitcoin works.

It is only a matter of time, when many third-party exchanges go bankrupt, that many will understand where to exchange and store their bitcoins.

Personal preference? I mean this is the type of thinking that doesn't understand what decentralized means at all, not even remotely. Like a million people mentioned before me in history, decentralized doesn't mean anything about price or ownership, it means control.

Meaning that just because we put our money into Binance, doesn't mean that Binance can print more bitcoins, there are 21 million of it and won't be any more, there aren't any organization that can revert the chain back, there aren't any that can move it another direction as they want, there aren't any that can increase the block size just because they want to without our consent. That's decentralized, our money being used in binance or whatever is not what decentralized means.

I understand your point. Some people use bitcoin only for investment and nothing else and as long as they get to do that, they wouldn’t care about the regulations. Even if it meant that it would strip away bitcoin’s decentralized nature. Some other people though greatly value their privacy and really believe in the fundamental principle of bitcoin that allowing the government to control and regulate bitcoin is something they can not and will never accept.

The centralized exchanges are just one way to get bitcoins but that doesn't mean that you need to keep them there, actually nobody will ever suggest you to keep your bitcoins on exchanges. For many people CEXs are the easiest and safest way to buy bitcoins, that's it. If you prefer to buy bitcoin on DEXs or by someone on the street, you are free to do that. Simply not everyone is willing to go for the most complicate route. You talk about being your own bank: as soon as you move your bitcoins from a CEX to your wallet you're good, at that moment you are your own bank.

Such an assumption is actually good because it is in accordance with the fact that Bitcoin is a safe choice because full control is owned by the owner. Banks don't. The money there belongs to them even though we are the ones who deposited or saved it.

Banks offer interest while every month our savings are deducted for many reasons.
Not to mention the complicated system that involves their use of our money.
Furthermore, when we want to do something with our money, it gives the impression that it belongs to those who we cannot manage as we wish.
Then, Bitcoin as money of freedom must be agreed upon.

not all digital currency that is decentralized but cryptocurrency mostly Bitcoin is decentralized currency and the government have been emphasizing on a way that they will make a cryptocurrency mostly bitcoin to be a centralized currency, but what makes bitcoin to be unique today is because it is been decentralized and the government does not have any power to control it market price and when looking at it you can see that what makes it to be decentralized is the unique nature of Bitcoin, for me I know quite well that currently what makes Bitcoin to stand firm today is base on its a decentralised one, assuming is a centralized currency it wouldn't have any effect worldwide.

People love to stick to what they know and has been working for them, you don't expect people to just change from their old habits overnight, it'll eventually happen but it'll take sometime. The idea of using centralized platforms is because people don't want responsibility for their finances but still want to benefit from investing in Bitcoin. The owners of those centralized platforms are taking advantage of our ignorant to enrich their pockets. If you asked the average investors of Bitcoin, they have used a centralized exchanges as some point and there's nothing wrong in doing that but exchanges should only be used for the purpose they were created for and not being used as a wallet for storing of our cryptos.


This is very possible to achieve, use a non constodial wallet and make use of only decentralized exchange or P2P exchanges. The only price I think you have to pay is paying a little bit extra when you're making a transaction because this platforms aren't that popular yet and at such have very little liquidity which might make transactions going on, on the exchanges to be expensive. You also have the power over your finances so you're incharge of protecting your funds. Scammers might also be numerous but if you're very cautious, you should be fine and be able to use the decentralized exchange without much challenges.