Topic: Why use decentralized bitcoin in a centralized way? - page 2. (Read 608 times)

You can use Bitcoin in a decentralized way if you don't interact with centralized platforms that require you to carry out KYC verification before you can buy and withdraw your Bitcoin. Most times, something can actually be designed to have one pattern of user case, but changes can take place and result in others using the thing. If you want to protect your privacy while using Bitcoin, then you should purchase your coins only on decentralized exchanges and also spend those coins on decentralized platforms. 

Bitcoin was created for everyone, but it's not everyone that must use it; most people still prefer to use fiat and also to save their money in the bank, and perhaps bitcoin is not a legal tender in every country, people still need fiat money. 

To understand why people do this, you need to understand The Anon Paradox which says that people want anonymity for "small" money and personal identity for "big" money.

In other words, for the spending cash in their wallet, people want to be able to spend that anonymously for relatively small transactions.

For major items like a car, a house, or one's life savings, people want that to be attached to their name so they could never lose it by accident or theft.

And most people do not want to guard their own major wealth, nor would they be anywhere near as effective as professionals in doing so.

Under this principle, blockchain-based cryptocurrencies get the consumer market exactly backwards: they are only suitable, technologically speaking, for very large transactions and holdings, and not suitable for the "small" money that one keeps in their wallet because transactions are slow and expensive by design.

The other problem is that most consumers don't want the kind of "privacy" that Bitcoin offers, which, without the use of a mixer (which most do not use), is no privacy at all since transactions are all available publicly. And for products like Monera, most consumers don't want privacy from government subpoenas, because they don't think they are criminals or don't want to tangle with their government.

Hence, today Bitcoin is used in a mostly centralized way as essentially a meme investment instrument.

In the future, pure centralized digital currencies like Haypenny currencies will become more popular than blockchain because they offer the product that consumers actually want.

Bitcoin is decentralized but who cares about that, since we all have our reasons of buying bitcoin. It is left for whoever is using bitcoin to use bitcoin in a decentralized or a centralized way. Bitcoin has given you the opportunity to be your own bank, and whoever cannot be their own bank can go ahead to keep their bitcoin wherever they want.

Some people that are new to bitcoin or cryptocurrency don't even know that exchanges are not good for them to store their coins. I have a friend that never knew about a self custody wallet until I told him, he has being storing his coins in an exchange all this while.

Centralized exchange has the local currency of so many countries but Decentralized exchange does not have, this is another reason why people love using centralized exchange for easy trade from fiat to bitcoin and vice-versa.

Bitcoin is money, asset, people who are using bitcoin in a decentralized way are people who value money above all else because they want to keep their money as private as possible. Those who prefer to use centralized exchanges because they don't care about privacy, they like simplicity and convenience. And both of these types of investors value money and all care about money, if they didn't care about money, they wouldn't invest in bitcoin.

You're right, no matter how strict and harsh the government is, there will always be a solution for us to use bitcoin in a decentralized way, the problem is whether we want it or not.

Indeed, these things are interrelated, where the higher adoption growth opens up opportunities for price increases, however, from a functional perspective, adoption seems to be slow, because it is limited. like in my country where it is only allowed to trade and invest, as if it cannot be used for real life, but this is better than being prohibited or having more stringent rules, at least we can make money here

What I mean when I say grow is not just about the price but also adoption. The adoption is just not going to be fast-forwarding if the regulation is too tight to almost ban BTC like China.

But because of regulation and platforms allowing people to buy BTC and bank payments started the adoption. I remember I sold my coins to a platform and have go go to a bank to withdraw fiat.

     You know, at first I had the same view, but later I also realized that it is not bad to use a centralized exchange platform. It's up to us whether we trust it or not. Because if you tell yourself that the centralized-based system is not safe, why do many communities in this field use CEX, and it's okay for them to submit KYC as well? 

     Yes, in DEX there is no KYC needed; we are really in control. It's just that when it comes to the release of profit from DEX, he has a bit of a hassle and there are many third parties to go through. And I also don't see any p2p features in DEX, or if there are only a few of them, unlike the CEX platform, which is especially the top exchange in the market for p2p transactions.

To use bitcoin the decentralized way, you simply have to ensure that you’re the only one who has access (private key or mnemonic phrases) to your Bitcoin. It’s that simple. For those who use decentralized exchanges, one of the reasons is how easy it is to use but the smart ones know that decentralized exchanges are only used to trade (buy or sell) and not to store Bitcoin. And for those who use Bitcoin bank i honestly don’t have any clue what’s going on in their head. Lol

People want ease of access, and for that reason, people prefer centralized platforms. Bitcoin was innovated to eliminate the centralized authorities that take control over people's money. But the development that happened through the centralized network has made people get adopted to it and continue using it, even after understanding the negative parts of a centralized system.

When we use it in a decentralized way, the control will be in our hands. Even a small mistake could freeze the account or make us lose control over the assets, whereas with the centralized way of using, even if there's an issue, we'll have a support team to resolve it. This is the reason why most people prefer the decentralized asset to be used in a centralized way.

Multiple choices of access were provided, and for beginners, centralized exchange seems to be more user-friendly. This is also a reason why people prefer using centralized platforms. Another reason was the high liquidity and multiple asset pairings, which make trading and other options easier.

I think you might be getting some idea wrong here,
you  understand that exchanges and institutional systems has been introduced into bitcoin but they have a lso served a significant purpose that we can't neglect in the history of bitcoin, you should know that decentralized exchanges are still under development and have higher fees than the usual centralized exchange and for those users that tend to use the crypto space more for transactions can find this annoying to pay huge fees for ever transactions that they want to perform but with centralized exchange that process is easier and have lesser fees attached to them, this in turn while deviating a little from what satoshi envisioned it has also facilitated the use of bitcoin as a means of payments and in some way allowed some users to buy and sell bitcoin seamlessly and quicker than I should have been.

Also you know that a lot of investors are still skeptical about bitcoin and institutional bodies like ETFs has played a role in bringing those people into bitcoin under a common flag of safety and this has also helped bitcoin to continue to spread abroad in its own way.

And you are free to do what you want, you can decide not to use centralized exchanges at all, but either way a common ground has already been established from the past occurrence of centralized exchanges and how they can't be trusted, so yeah you can use them temporarily and use custodian wallet to store your crypto.

Seriously Bitcoin is moving away from it's purpose of invention because a lot of people now uses centralized exchanges instead of decentralized and non custodial wallets but I think people are afraid of the government that is why they still use centralized exchanges and they also feels that KYC makes the system more transparent since every users real data are stored in there but I believe with time people will start to know the need for a more decentralized system.

Most people in here would consider bitcoin to be the safer option compared to centralized banks. Banks are very sneaky and has lots of mysterious fees. Not to mention the crazy interest they put on everything. It’s one of the many reasons why people was attracted towards bitcoin. The convenience of exchange as well as the privacy and anonymity it provides.

On one hand, OP is completely right about people making a mistake holding bitcoin on centralized platforms. ETFs are a great example of that centralized bitcoin.
I don't own any of that and I wouldn't put my coins there, even if they paid me 10% a year for doing so. I'm more concerned about my privacy and freedom and I will not put all my money at risk just to get 10% a year.

On the other hand, it's their mistake to make. If they find this risk worth taking, let them. It's their life and their money.

I quite agree with you. For people who are used to the traditional methods of safekeeping their monies, it can be quite difficult trying to learn the new banking method Satoshi introduced. I think it is better they stick to what they are comfortable with instead of making costly mistakes while trying out what they have no clue about.

Some are using the centralized wallets or exchange to hold their crypto, in order to save up fee when they want to trade it into Fiat, or earn by staking it, but we should always remember "Not your keys, not your coin".
If we don't have full control of it, then it is not ours and the risk to be hacked or something is always there, so it is better if we would put it on our own wallet.
To be honest it is really easy to achieve you just need to have your own wallet, which is not part of any third party or exchange.

It's your choice to tread the path that appeals to you the most, the most important thing is being in the know. Although I see centralized exchanges as just a marketplace where you can trade coins for other coins or for fiat, but some people have turned the exchange to a place for storing coins for a longer time. Bitcoin was created to give you power over your finances by using a decentralized approach to handling your funds, so it's your decision to remit such autonomous power to the mercy of an exchange which you have no control over and face the consequences if there becomes an unhappy ending.

its no news that funds kept in exchanges are yours only as long as the exchange deems you fit to have access to them, or as long as they are in full operation, but such cannot be said of decentralized wallets where you have access to your coins whenever you wish as far as you've your seed phrases and private keys. Funds that are left in exchanges are supposed to be those which would be needed within the shortest possible time and not for long term storage.

Most people keep the bulk of their funds in exchanges to escape transaction fees when they intend trading their coins, but its certain they pay a greater price when exchanges folds up, so its better to pay a little price and play very safe.

Well, that's the whole point of decentralization it is your money so use it as you wish whether you keep it in your wallet or prefer a custodial wallet.

I understand what you are trying to say but can you pay for Bitcoin when you are buying your groceries? Not yet.

So people who have their funds stored in bitcoin are forced to convert into fiat to pay for their needs.

Hmm, I cant get it, bro if you want to use Bitcoin in your control all you need is just a non-custodial wallet and store your Bitcoins there then you'll have all those access points which are demanding, I am not sure the numbers but on Bitcoin network, I'm sure mostly people hold their maximum Bitcoin in their custody yup, there is a large number of the user using the exchanges to store or trade their Bitcoins

Reasons:
 
Newbies
flexible trading access
Cost saving.

Still maximum number of Bitcoins are stored in their custody.

Because it's more convenient for those that don't have any kind of knowledge on the technicalities involving a more complex but decentralized way of doing transactions with bitcoin. That's the only reason why they do that plus most of them have a better service than decentralized exchanges because they've got billions put into their service to make it so they can cater to the people that are going to use their services. It's also much easier to buy your bitcoin there as there's close to no fees, the only downside is that it's not your coins anymore once you deposited your cryptocurrency there.

Sure, people are using bitcoin in centralized exchanges or in centralized ways which I think can only be involve in sharing of bitcoin within various wallet address.
While some bitcoin users are too careless to be using exchanges to store bitcoin which is not in line with decentralization, but they chose to keep their asset on the exchanges instead of sending them out after trading them in the exchange.


Yes, a lot of people here are using Bitcoin the Satoshi way which is taking full control of your Bitcoin and becoming your bank.

You can buy a cold storage wallet, or any non custodial wallets to store your bitcoin, but be mindful of your private key, learn how to save them well because the fear of losing private keys is the reason some people prefer using exchanges. If you can afford any physical bitcoin wallet, you can use an open source wallets like Electrum and Blue wallet for the main time before you can afford a physical wallet.