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When you seriously come to think about it - storing your Crypto in exchanges is better than using cold wallets.

The first main reason is that exchanges pay you an interest rate on your Crypto whilst cold wallets pay none.

Secondly, we definitely believe that more and more users would move into hot wallets than using cold wallets, Ledger.com could become the next "Netscape" and then if your hardware device gets faulty and you would need support from Ledger.com - then you might find yourself in trouble. It's not a wild guess, this could seriously become the reality in the next few years.

We've just posted an article about this so if you wish to read our full opinion you're welcome to read this here:

https://freebitcoin.io/articles/free-bitcoin-wallet-and-investment-advice

But as mentioned above we've tried to point out here in this thread in short version the very few reasons why using an exchange is better than using a cold wallet in the long term. For instance 8% APY on your USDT is something that is seriously worth more than just additional "security" which is not really a true security because you are relying on a centralized private company such as Ledger.com and people seem to forget that .... Netscape was also a great success in its early days but around 2003 it almost disappeared and today almost no one is using it.

We definitely believe cold wallets are going to be history whilst hot wallets or exchanges such as Binance.com or Crypto.com are going to be the future - the listings and value of BNB and Crypto.com are just enough to indicate to you how they are growing fast .... whilst Ripple doesn't move for years between $0.20 and $0.30 - BNB and Crypto.com have already achieved massive gains.

We don't want to keep this thread too long but feel free to refer to our article to read more and let us know whether you agree or not with this stipulation.

What happen to 'not your keys, not your coins' principle? What if the exchange gets hack? unless it is SAFU then you have some refund, but I would say that around 10% or less are SAFU protected. I know that you have to practice good security hygiene and that's one of the drawback that I'm seeing if you store your coins in your own wallet and have the private keys. I have nothing against those exchanges that is paying interest or people wanted to take advantage of this services. But there is also that risk.

Indeed, that risk exists but in our opinion the 8% APY outweighs the risk.
The world is marching towards regulation and not towards hacks, if anything exchanges would be at risk of being regulated for paying interest rates without having the users declaring the profits in their own jurisdictions - these could be potentially more relevant issues to deal with in the near future, because Crypto to some degree is replacing the current banking system that has failed to provide high yields like in the 1990s and the banks cannot be reliable when they work only Monday thru Friday excluding bank holidays whilst Crypto works 24 hours a day, 365 days a week ... the benefits are next to none and it's only a matter of time before Binance.com for instance would replace HSBC. That trend is now unstoppable.

Totally disagree and i discourage anyone from believing what OP said.
1. What is the point of risking my crypto assets for just only 8% APY? What if exchange gets hacked, which is very likely, Don't you see it's stupid losing all your assets just for such a small gain?

And don't get me started on exchange hacks because me and you very well know that It keeps happening now and then and most exchanges have succumbed to the hacks and closed down

2. If i kept my cryptos using a hardware wallet. The hardware wallet is just and interface for accessing and spending my cryptos. I could as well backup my seed phrase or private keys to the addresses storing the coins and keep them in a safe place. Even if trezor or ledger projects got discontinued. I can easily import my address into an available wallet service like electrum and safely access my well protected funds.


Now tell me If you kept $1 Million on Binance in a bid to get 8% APY and tomorrow you woke up and their website is no more. Where are you going to reclaim the money from?

Ledger users are relying on Ledger.com just to provide technical support, but it's not "centralized" in a sense that they don't hold user's private keys and thus coins. Anyone using a Ledger wallet have *100%* control over their coins, and even if there is technical problems on Ledger's side, the users can choose to switch their wallet to another one as long as they hold their private keys/mnemonic phrase. You can't do that with an exchange. If an exchange gets hacked, technical issues,bankrupt exit scams or whatnot chances of you losing completely your coins are high.


That's really a bad comparison... Netscape almost disappeared today simply because there are better alternatives, without talking about the fact that it had major vulnerabilities..

In exchange, users have to provide their KYC information while cold wallets there is no personal information to provide. Is it worth it? Definitely.

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To summarize, Storing your coins in an exchange is probably the worst thing you can do in the crypto world for these main reasons:

1- KYC/AML
2-Can we count how many exchanges got hacked and how much money have been lost?
3-No control over your coins
4-Outrageous withdrawal fees at times
5-Less security

We cant deny when it comes to security on having that 100% safe since neither of the two would really have the chance on getting lost of your own coins but
storing up your coin on an exchange or a service for long term is much more riskier rather than keeping your own coins on your hardwallet.
Yes, it does have cons but majority would prefer on losing it up rather than it had been stolen by someone.Not your keys not your coins this
had been a common line and i dont know on why you do have this kind of input or views.  ???

If you believe Google is going to collapse tomorrow then by all means sell their stock, short it and become a millionaire.

You can say the same about the BNB currency or on Binance.com - yes, they could shut down tomorrow, but just like Google is probably going to exist tomorrow - then Binance.com is likely to be here tomorrow. Even if Google's CEO dies god forbid - the same can be said about Binance - they already have fences and proper ways of continuing the business for years and years (Microsoft's ex CEO, Bill Gates, is no longer producing Windows but instead dealing with Coronavirus vaccines, whether people like it or not is irrelevant but Microsoft itself continues to develop other products without Mr. Gates in it).

Regarding Ledger.com - if they collapse and you lost your keys or for some reason cannot find them - and they are non-existent then you're in a big trouble.

All in all - yes, the control of your private keys is important, but trust supersedes those fears - please take a look in CoinMarketCap:

https://coinmarketcap.com/exchanges/binance/

Binance had a volume of $1,628,472,595 USD in the past 24 hours - of Bitcoin alone without taking Altcoins into account ... !

Oh, and this is a prediction that failed to fulfill itself ... well, that guy has 2 weeks to prove his prediction to be accurate:

https://www.ccn.com/binance-will-be-shut-down-in-12-calvin-ayre/

The banks are the main ones who need to be worried, not the investors.

Try telling this to Crypto folks who witnessed the Mt Gox hack and saga afterwards. Mt Gox as the biggest bitcoin exchange back in the day processing over 70% of all bitcoin's transactions (https://en.wikipedia.org/wiki/Mt._Gox)
To this date there have been lawsuits after lawsuits

I can name at least three exchanges that have collapsed through theft of funds stored in hot wallets.  Even exchanges need cold wallets to store the bulk of user's funds that aren't shifted in and out each day.

Not sure how many exchanges payout interest, but it'd be worth considering earning interest on non POS coins if you plan to HODL them for a while.

That's a fair point, but you have to remember that in 2014 things were a bit different:

• The price of Bitcoin was $400 mostly during 2014, a price that no one can even dream about now in 2020
• There was no regulation and Bitcoin was fairly something new that wasn't adopted by many
• The key feature we referred to is regulation

Yes, technically Binance or Crypto.com can always shut down their doors, claim there was a hack and run away with a lot of funds to some forsaken island... but Crypto in 2020 is not the same Crypto in 2014.

Nowadays there are lots of regulations in place, Crypto is not as anonymous as it used to be, and it would be quite easy to trail where the money is going in case it would be stolen by the exchange itself.

Small exchanges might do that, they have small volumes so they can always screw their investors (Bittrex for example) but with ever increasing regulation it's hard to see Binance facing the same faith Mt. Gox faced in 2014...

It's like in 2008 Washington Mutual in the US disappeared ... it was bailed out by Chase but if you google search the word "WAMU" you would find a radio station ... back in 2008 things were different than they are today....

It doesn't mean things can't go wrong, but imagine Google's CEOs running away with the company's funds and leaving Google to shatter to pieces - if this is unlikable then probably the same can be said about Binance.

Most businesses want to stay and continue trading for a long term, as they earn fees from so many trades - security is definitely an issue but what we know now in 2020 is not the same things we knew back then in 2014 .... Bitcoin in 2014 was not the same as it is now ...

You could also try to compare it to MySpace ... Facebook managed to succeed, MySpace didn't ... likewise Mt. Gox - it's a shame that so many lost their funds back then in 2014, and it's a shame MySpace couldn't become a successful business like Facebook - but you can only see things now ... go back 5-6 years and you wouldn't be able to see and learn what we already know by now.

Again if anything is to be concerned of with big exchanges - is mainly regulation. Regulation is definitely a reason to be concerned over a security breach.

Between avoiding the risk of losing everything and the chance of gaining 8% APY (which btw I can earn from other sources), I'd choose the former. I'll keep coins on exchanges, too, but not more than what I can afford to lose. I think a better advice would be to use both channels wisely. There's no point in choosing between one and the other.

The interesting thing is encouraging. But we're even earning if the value of bitcoin goes up.
Go with your interest but security is what matters most for someone like me. I don't think that exchanges will even give you a refund if they are hacked unless they are generous like Binance.

Even banks don't refund everything when they get bankrupt. In my country, account holders can only recover up to 500K no matter how much balance they have when their bank collapses. Exchanges probably have a worse policy when it comes to refund.

The idea behind the exchange having your back is still a "grey" area in my opinion. They may be able to refund some users funds to 100% but what about the high $ accounts, they'll probably get partial refunds. Those with partial refunds will be given the nicehash treatment where they're still paying users and most still have not recovered 100% of their funds. I'm still behind the 'not your keys, not your coins' principle like what @btc_angela said earlier. For example Binance.us USD deposits are eligible for FDIC insurance coverage as of 2019.

What does Bitcoin different from then and now have with the security a company has over the wallets of their customers? Argue to me all you want about how security has improved over the 6 years but hackers aren't stupid, they also learn just like how companies learn from hacks.
Honestly, said scenarios are only because of the persons' himself inability to actually manage their stuff related to crypto properly. The main difference between using cold wallets and exchange is that YOU'RE directly responsible for your funds in the latter, but in the former? You're only partial, heck you're only doing transfers, not storage. So what happens if the one who stores it gets into a problem? You didn't do anything, yet you were DIRECTLY inconvenienced by their problems.

Both have risks, as the we all know. Although there are issues with keeping your own private keys and seed, but I would prefer this method though. Exchanges can be hack, whether inside job or they can simply disappear and pull a exit scam.

But what about the dangers of having your private keys then? Being your own bank has it's own pitfalls, like hardware wallets can get damage like in a case of fire or something.

So proper storage should be the the number one priority of every investors and not putting their coins on a centralized exchanges like Binance, who by the way has been hacked last year. So there's a lot of constant threat on both side, it's really depends on how we manage our assets.

In terms of whether or not your crypto is giving you a regular interest simply for hodling, then I would say exchanges are better than just letting your coins sleep in your own cold wallet. If you are after a little profit annually, then go for storing coins in exchanges. After all, you cannot yield farm in your cold wallet.

But the contentious issue here is about security. If you are storing your coins in a hardware wallet, even if your hardware is lost, stolen, and broken and even if your laptop or smart phone or PC is lost, stolen, and broken you still have your coins with you.

Now, compare that to an exchange. It could be hacked. It could exit scam. It could suddenly close. You could be blocked. There's just so many possibilities of the exchange getting away with your funds. That does not happen with a cold wallet.

You may argue that you could still get a refund if an exchange is hacked or got closed. Well, take it from someone who has a significant amount of BTC and a few altcoins stuck in Cryptopia. It's been how many years now and where are my coins? Where's the refund?

There are many things that you could consider when you are going to choose to HODL in an exchange or in your crypto-wallet in which you hold the private keys. Just like in your article, the main aim of "YOU," as the HODLER, aims to profit yearly or believe that it would MOON in the long run.

What I mean by this is that, if you are aiming to profit by a certain amount of time, HODLing in a custodial wallet would be ideal and possibly *stake* your money and freeze it for a time. The con with this is that you don't get your private key, and if the exchange goes down, your capital will go down as well.

Technically, if you are a believer in Bitcoin or an Altcoin that you are in, you HODL it in your cold-wallet and not worry about any changes in price; just your amount of coins is what matters. Maybe you could continuously invest in it and have more of it. You will never know if it will take higher in price or not, but you would accept it since you're HODLING it.

If I am going to choose between the two, I'm making sure that the funds that I have in the crypto exchange could be gone and would accept it. It's a risk, but you can't gain anything if you don't risk and learn from your mistakes.

Storing in large exchanges and implementing AML / KYC and many other layers of security are better than trying to keep them in devices like Ledger, Trezor, or on a computer. They are at risk when we lose the device or get a virus.
I usually keep my money on exchanges for many years. Most of them are reputable exchanges and large exchanges because they have better security systems and can return the money I had stolen if that happened.

Well said & Seconded. +1 Merited.

I'm not agreeing with this statement because one of the best ways to store your coins is with your wallet.

In some issues, the exchange still can manipulate their users and one and their funds too.

Storing your funds directly to your wallet is you can have full access to it then the exchange if they have some maintenance they can make other trouble to your money.


But still, if you want to keep your funds to an exchange you can use the platform that has a KYC or known or verified platform.

Also, find some platform that has good customer service.

the small percentage of exchanges that i've seen pay an interest (which is more like 0.1% of all exchanges) have been shady and scammed their users and ran away. i have not seen any major exchange without any plans to scam its users do anything like this. the best thing they could do would be to pay the PoS reward of the PoS shitcoins you keep there but not the legitimate coins like bitcoin.

it seems like you know absolutely nothing about the history of crypto exchanges similar to Binance. a couple of years ago the "Top exchange" with the biggest volume handling millions of dollars worth of trade was another exchange and Binance didn't even exist. that exchange is now in 100+ rank. before that exchange there was another one that did the same, before that another, and so on.

not to mention that the days of CEX is numbered as they enforce more and more stupid rules that the best of them is KYC. rules such as blocking your account if you ever used a mixing technique or have any coins that they think is "tainted". eventually they will be replaced by DEX and their centralized coins (eg. BNB) dies with them and replaced by more decentralized coins.

Yeah and sending your bitcoins to some random self proclaim progressional Investor or trader (in some cases miner) you encounter online is far better that actually educating yourself on how to do this things yourself. Don't let this exchanges decieve you, your funds are never save with them. Bitcoin came with the ideology to give back control to our finances why then are we throwing that away by handing back control over to the elite disguise as exchanges.

Cryptocurrencies exchange especially centralized ones are just as bad as your bank. If you think the returns you get are good reason why you should hold your coin in exchanges then it seems you have no idea what your funds are been used for or don't value those previous assets of yours. Keeping our coins on exchanges simple means we're giving more power to the centralized government and most likely they'll misused that power, if that isn't already happening. With the coins been entrusted to them they can use the funds to manipulate the market to their favor.

Lets learn not to shy away from responsibilities, as I believe it must be why the number of coins getting stored on exchanges are becoming a trend once more.

This is the most ridiculous and illogical thread I have ever seen in this section. How can anyone even think about storing their crypto-assets in exchanges, after all the exchange hacks and robberies we had during the last 7-8 years? You never know when a particular exchange will go down. It will happen all of a sudden, and in the blink of an eye, your funds will be gone. And this has happened to me multiple times. I lost my coins when Mt Gox went down in 2014. The same happened with BTC-e in 2017 and Cryptopia in 2019. After losing a large part of my assets, I believe that I have learnt my lesson not to keep any of my coins in exchanges. But what can I say about the others? After all, it is their individual choice.

None of the above would prevent Binance from going down the same way as MtGox.
If regulation would prevent anything then we wouldn't have an exchange getting wiped out in the last years and obviously wasn't the case.


Apples and nailclippers.
Compare it to a bank where the CEO empties all the accounts and nobody can reverse the trasnactions.
Btw, do you even know where Binance is operating from?



If you get a virus you can lose also your credential and your exchange account, at which point nobody is going to reimburse you in that case.
Good luck storing your coins on a "reputable" exchange.

To immediately refrain from any representation of any hardware wallets, but to say that it is safer to keep cryptocurrencies on a crypto exchange than on one such device is one big nonsense - but when someone writes an article this way without even knowing how such devices work then we get this kind of nonsense.

To compare Ledger or Trezor with Netscape is also more than an obvious example of ignorance of how such devices work - each user generates a seed as a backup, and that same seed can be used in most other crypto wallets - so even if Ledger as a company disappears at any moment nothing is lost.


Have you perhaps heard of the Mt.Gox hack or maybe about Quadriga exchange? Tell these users to still keep their funds on the crypto exchange and you will see what kind of response you will get. The profit that anyone could make if they only hold BTC in the past 5 years is at least x50, and you're talking about a miserable 8% here, with the aim of promoting your site and getting a few free clicks ???

If you think it's better to entrust someone else with the custody of your cryptocurrency, then be sure to do so - but giving advice like this in public is not only stupid, it can have very dangerous consequences.

If that's what you believe in then so be it for you two, but I still don't want to store my coins in any exchange even if they are reputable or they are the top exchange in the market, if there is a hack and the hackers happen to stole the majority of the coins in the exchange it will take some time and a lot of processes before you can get your coins in those exchanges, take a look at Mt.Gox they are a huge exchange at that time, see how many years before the owners get their coin, I prefer to keep my coin and responsible for it.

Nothing beats a stamped Cryptosteel cold wallet.
And the worst place to store your bitcoins is on an exchange or other online service.
That's like leaving your wallet on some random table in a restaurant and going to the toilet and see if it's still there when you get back.
If you do that, you deserve to get hacked and lose it.
There are some risks you just do not take.

Oh and don't put all of your eggs in one basket either  :)

A ledger can be both a hot and a cold wallet. And you don't need any support to get back your coins, you need to use your seed phrase. Ledger can disappear, your ledger device burn down, your computer crash, you should still have your seed phrase.

I have some amount of crypto on an exchange for trading and I don't get any interest, since I'm trading not lending or whatever.

I consider that crypto on the exchange to be something I can lose, just like I lost already when another exchange was hacked.

Tell your nonsense to MtGox users !

The only crypto I really own is the one for which I have the keys, and nobody else does.

You can always restore your wallet using seed phrase you had written on paper diring the very first setup of your hardware device. If your device is somehow broken, you can buy another one and import seed phrase there. If you don't control the piece of paper with the seed phrase catefully written on that piece of paper, you don't actually have any money. That is a fundamental principle of using digital money based on cryptography. You can't claim your rights on something cryptographically encrypted, if you can't prove you can decrypt it.  Moreover, your government may come up with executive order like 6102 was but regarding bitcoin and cryptocurrencies  and may coercively seize bitcoins pegged to your identity. Every legal exchange must comply with local legislation and they will be handing over "your" bitcoins to your government.

As stated, I agree on storing my funds on a cold wallet and not on exchanges (for the long term). I only find exchanges helpful if at the moment you receive them, you spend them. Otherwise, an exchange is working like a bank, and even worse. Why should I trust a middleman? Where are we? On the fiat system? Because as far as I know, bitcoin created to prevent trust and not the opposite.

About the not your keys, not your bitcoins, I totally agree upon that. If you have 1BTC on your Binance, you don't really have it. It is Binance's bitcoin, they just allow you to transfer it. OP, you don't have to get deceived to learn. There are so many failures on trusting such companies in the past.

And to be honest, only those who don't know how bitcoin works pay Binance. The educated crypto-enthusiasts know what's right and what's wrong.

By the way, this is what banks do.

Are you talking about hardware wallets here? What about software wallets like electrum on a cold machine?

Of course this is correct if you only have a couple of dollars worth of coins.
If you have anything meaningful I don't think that anybody sane would leave the funds onto the hands of various businesses / exchanges or not, even with KYC. And I'll tell you why:
1. Bitcoin is not properly regulated and you may end up with your funds seized by govt.
2. Bitcoin related businesses are not properly regulated either and a hack is easy to be faked. PS. Where is Binance's "official address" this year?  :D (Is it Malta, China, Singapore or somewhere else?)
3. Nothing is too big to fail / fall. A business that went bankrupt for whatever reasons will not pay your funds.
4. If the business will leave you without money, will you be able to hire good lawyers to fight for your money? With what funds? And with what odds for success?

All in all, I expect everybody sane who has life changing funds in Bitcoin will use (offline) cold storage for them.

So we should bet on the house in Vegas casinos?

That's not allowed because the house always wins.

Leaving your coins on the hot wallets of any Exchange is never considered to be safe even if they can pay us with decent interest rates.Being a hot wallet, it can be easily accessed by the hackers. So it is often advised that if you are not into trading then you should not store your coins on the Exchanges.You should rather go for an offline cold wallet which will provide you with more security options.

Talking about KYC and AML, now a days almost every Exchange take these security measures but I don't think that it can stop hackers from accessing your wallets and any Exchange will take responsibility for such hacks and will reimburse you. On the other hand cold wallets provides you with a pin code which is required during every transaction we make and a 24 word backup seed which can be used to recover our account in case we have lost or damaged our device. Undeniably, cold wallets also have some security issues like few months before Kraken Security Labs told that it is possible to access the private keys by hacking the Trezor hardware wallets but the question is how often such hacks take place? We have heard many incidents regarding an Exchange getting attacked by the hackers. Some of these incidents are mentioned in the above replies but how many times you have heard that a hardware wallet got hacked? So it is not justifiable to say that Exchanges are more secure than cold wallets.

The decision to store your coins on an Exchange can also depend upon your willingness and the amount of coins you have to store.If you want to store an amount of coins which you can easily afford to lose or even if you are willing to store more then I don't think it should bother you that whether it is safe or not.You can simply stake them and enjoy regular interests.

I feel better to save coins at the wallets such as ledger or another wallet than to keep my coins at the exchange, even for the exchange like binance, bitmex, or other reputable exchanges. But if that is for the short term, I think it is okay to save on the exchange's wallet because the coins will be used for trade, and after it gets what I want, I will send it to another wallet. But we can not force people who still store their coins at the exchanges because maybe they have their own strategy, which will depend on what people use with their coins.

If you are not concerned about your privacy and you can trust the exchange you are using (can bear the loss involved in case of exchange being a scam or exchange face an unrecoverable hack), an exchange could be a better option with all those email and 2FA verifications for normal users. But if you are investing in the future of coin and know what you are doing, it would be much safer to take things on your own hands.

Not only manipulating but also the chance of being hacked and all our asset will go with the target.
and this has been happening until now.
specially in Ledger wallets in which the safest wallet has been ever created .
I would never suggest to people leaving their Currency inside exchange for days,we can store some amount if we are in trading just to make sure we are ready anytime the currency we wanted falls the price and we need to purchase instantly.

I'm afraid to say regardless of how much they give me a percentage when I store my crypto assets on their exchanges, It won't change the fact if their exchanges where compromise, my assets will be lost forever along with the percentage I get. I rather prefer to store my crypto assets on my own because storing some big amount on some exchanges will cause us an anxiety that won't make us some pretty rest in our sleep. we already know that exchange hacking is a face and there were some cases that some of the said exchanges have doctored their hacking just to stole every single cryptocurrency that have been stored on their exchange wallet.

Then you are a bit ignorant on how these hardware wallet and non-custodial wallet works. This has been pointed out already but let me repeat, seed phrases and private keys of your wallet can be save and kept in a safe place. In case your ledger or trezor is lost, you can buy a new one then import the seed phrase/private key of the old wallet. 

Mate, have you even followed news on hacked exchanges? Exchanges can't just magically come up with the lost funds. Take for example Cryptopia which was hacked early last year but users, who kept their funds there, are still waiting for a refund until now. If you want another example, read on Mt. Gox.

I disagree to this, we all know crypto exchanges are one of the worst places to store crypto, I mean take a good look at the past records, it's almost inevitable for crypto exchanges not to get hacked, as at 2019 about twelve crypto exchanges got hacked and up till today they are unable pay the users,because all the stolen funds have not been recovered, that's the more reason why I would never advise anyone to store their crypto on exchanges, with that said :- The best place to always store your crypto is in your wallet

It is clear that for you cryptocurrency is only about profit. If you are willing to trust a 3rd party with your keys for 8% interest (if that even exists) maybe you don't have much invested or you are just naive. What exactly do you think was the vision of Satoshi Nakamoto when he created Bitcoin? Do you think centralized exchanges follow that vision?

More and more people are moving away from banks to cryptocurrency in general precisely to be able to remove the 3rd party. To take some responsibility and control their finances. It is difficult obviously and things can go bad if you lose your keys but is a risk some of us are willing to take, and you have to have some backups and with time people will develop better ways of securing their keys.

If you are using an exchange to trade constantly that's understandable but if you are using them to store all your funds or a huge part of it, that's just dumb. With what you are suggesting, just keep your funds in your bank! The only downside is you won't have 8% interest annually but if your concern is security a bank is more secure. Centralized exchanges have all the downsides of banks but in steroids! No privacy, security meh, prone to hacks and no refunds, fishy staff, withdrawal limitations, locking accounts and I could go on an on, I mean just check the news and every once in a while there will be exchanges hacks... Just take some responsibility and assume your finances, that's the purpose of cryptocurrency.

It is good see jokes coming around during troubled times, anyone with a bit of common sense could identify that none of the exchanges or wallets are secure as you could hear major hacks and then the end customers looses their funds and then they have to fight for the coins for years. Stick to the original concept of storing the coins without much hassle and why would you risk storing under someone else's authority when you do not need to spend much to hold he coins on your own. The interest rate you are talking about is meager and considering the risk reward no one with the right sense would risk :P.

True u will never get an interest on your bitcoins stored in a hardware wallet. but the main priority for some one using a hardware wallet is not earning an interest rate but protecting your assets securely which an exchange by its very nature can never do.

Also just because someone offers you a high interest rate doesn't mean that you should so readily part with your assets. The reason an exchange offers you an interest is because they want to increase liquidity in their platform. And if an exchange offers you an unusually high interest that to me indicates that they are facing a liquid shortage and should be stayed away from. I mean if a bank offers you a 40% interest rate would you really trust them with keeping your money safe.


Yes Ledger could at some point get into legal issues/bankruptcy/ go out of business etc but as far as i am aware you are still the only one with your keys. So it would be fairly easy for anyone to recover their wallets using any other interface to the block chain. Your coins are never at risk of being lost due to ledger/ cold wallet provider going out of business  they are not custodial wallets.

Furthermore Hot wallets are always at risk of being hacked owing to the large number of coins they contain, which is why why even the exchanges themselves store most of their customers funds on a cold wallet. I.e The exchanges that you are so eagerly promoting don't deem them to be a safe from of storage.


What exactly is the relevance of BNB coin jumping in price or binance's growth as exchange have to do with wallet security.



Ahem isn't binance or any other exchange also a Centralized company and therefore just as much at risk of going under as Netscape. This has happened numerous times in the past( eg. Quadriga/Mt gox) and it is for this reason that a cold wallet ( is not custodial) is always recommended.

This is a bunch of nonsense if this was true then why many exchanges and casinos use cold wallets to store the majority of the funds of their clients? Because in the case of a hack they will only lose a small amount of money and not all the funds coming from their investors, second you are equating hardware wallets with cold wallets and they are not the same, you do not need a hardware wallet to get a cold wallet.

You could easily create a cold wallet by installing electrum in a Live CD, copy your seed words and creating a file with your public keys and then you can reset your computer, that way the wallet will be deleted and now you can only recover it with your seed words.

If I'm not mistaking I think I read somewhere that Satoshi was ok having 3rd party standing as escrow for bitcoin transaction although this isn't centralized to some extent since he emphasis on the transaction been peer 2 peer but seems that's what brought about the idea of centralized exchange since the founder itself was ok having escrow work with the technology he has created for trust to be built. I'm not against using centralized exchange (infact I'm a new if tger biggest fans) since they make investing in bitcoin a little bit easier especially as I don't have to stress myself about trusting the users I'm transacting with.

But where it becomes a big no is trusting my funds to their care when they're as valuable as a result of their centralized server can be attack at anytime and the scammer make way with our funds without leaving any trace. Join centralized exchange but don't trust them with keeping your coins safe. Only you can do that for yourself.

Only some of them. Coinbase doesn't pay you anything. Some exchanges like yobit are really shady. Holding money on exchange in hope of earning 1% a year is really not my thing.

If my wallet breaks I'll still have the seed. Do you have the seed for your exchange wallet? ;)

Ah no.... What if the exchange disappears? If your crypto was legally protected then I would do it but only for the interest. If your ledger gets damaged or even lost you can still recover your coins, I'm not sure why you don't know that.


Yobit pay much more the 1% a year, do your research. There plenty other places as well where you can get 8% on your holdings.

So you also keep your money on disreputable exchanges?

Why do you do it? To feel the thrill that they could run with tyour money?
Is the market not volatile enough for you?

Losing the device doesn't mean losing the coins. You talk like someone who never owned a hardware wallet.

This doesn't make them any less shady, on the contrary.
I said 1 because many exchanges don't pay anything. Usually the worst exchanges pay the most. Guess why.

Storing your crypto in exchanges is by far risker than storing it in cold wallets.  Even if the exchanges are reputable and high profile the issue is that there's always a risk of them getting hacked. This is not the case with cold wallets but you do have to keep you private key safe.

It also depends on the reasons for keeping the crypto, like if its for easy access then obviously exchanges would be better than cold wallets. I think the matter is entirely dependent on 2 factors; accessibility & safety.

That's the way of saying exchanges that they aren't that really safe compare to cold storage but we can give you incentives for storing your assets to our platform. And yes, it may vary on the exchanges, some are offering 1% annually. If you really prefer having this, than safe storing then you can go with Binance, they are really the ones who made it first I think.

Okay let's stop this which is which comparison, just weigh it personally, if you want your asset to have an interest like annual interest then go with exchanges that offers it, if you want to keep your asset on your own leave yourself a cold storage, these two have advantage and disadvantage and to be honest the security is in our own hands.

Although I agree with you on some of the points that you mentioned, but you only mention the good aspects of hot wallets or exchanges, but you do not mention the bad sides, you did not mention for example that many exchanges, including famous exchanges like Binance, have been hacked before, and there Exchanges did not compensate investors for their losses, this is in addition to the exchanges that became SCAM such as IDAX and others....

It is true that storing our coins on exchanges is much profitable, because we can earn interest on these exchanges. But it must be admitted
that storing coins on exchanges is much riskier than storing on cold wallets. Lots of data shows that exchanges are often hacked. Especially
for whales who have a large number of coins, will not take the risk of storing all the coins held on exchanges. My advice is why not use both
exchanges and cold wallets, it would be much better. We can store some of our coins on exchanges for trading purposes only, the rest is stored
on cold wallets.

The last time I checked, only few exchange site offer this kind interest, mostly exchange site that offer lending service are those that pay interest to their user according to the they have have coin.

It sad I wasted some minutes of my time surfing the link you provided in other read the remaining opinion you have but I dont see anything that seem to be information about the reason why saving crypto on exchange site is better than cold storage.

I'm not sure about that, I would agree that people are storing their assets on an exchanges, but for trading purposes only and I don't think that they are going to let their coins sit there for a long time just for 8% APY.


Yes, exchanges are being regulated, but the risk is still far greater if it's getting hacked, data shows that hackers are still actively pursuing exchanges because of the potential of a 'one big hit'. And then we have state sponsored hackers which makes exchanges very dangerous. Again, exchanges replacing banks? or making them obsolete? nah, the old and traditional banking system won't allow that.

choose both and share assets for both exchange wallets and cold wallets is the right choice. Saving on the exchange is not always safe because you don't have full control over the assets we have, but it will provide several benefits such as saving assets and getting some interest like the one on Binance today. then can trade very easily.
Whereas when storing in a cold wallet provides better security and complete control because we hold the keys ourselves. no increase in profits but good for safe long term investment.

Both wallets have their own advantages and disadvantages, but the most important thing is to choose the best and most trusted exchange with high priority security such as binance and use cold wallets such as the nanos S ledger and the like and must be kept properly. Asset security also depends on vigilance owner of the asset itself.

I agree, the top 10-30 cryptocurrencies always have good volume and some of them can either perform a savings function or place a bet to make an annual profit. If you keep them in large exchanges then rest assured you have KYC and multiple layers of security for it.
I used to save my money in Ledger but after my Ledger was lost, I had to spend another money to keep buying another device. They are quite troublesome so I choose to save in exchanges. It is also easier to trade when the market goes up and down than to open the device and connect.

This comment is underrated.

So are you saying you don't want to take responsibility for your own funds anymore?

Another question, what if you wanted to move your funds from exchange A to exchange B since volume and price is better there? Your funds will be stuck in exchange A because it takes an hour or two before they can process your withdrawal and it's probably too late by the time it's completed. If you had kept them in your cold wallet all along, you could have transferred and sold in minutes.

Dude, the big exchanges rarely have delayed withdrawals. I have tried it many times with Houbi, Binance, Okex and I trust in using them.
Next, cryptocurrencies in the top 10-30 have no high slippage, they only fluctuate in 0-0.5%, I have no intention of making such low profits.

this is what others are also pointing out.  its true that binance experienced to get hacked before but is it they paid the hack funds ? but im not sure to other top exchanges . scam exchange are not part of this because they are scam and not been hacked .

 he also said that exchange provides interest , i know this is only applicable to some but this isnt easy because they also require some things before your account recieved some interest .

Totally disagree with you OP...

All hardware wallets come with a Seed and this seed can be used to recover your coins/tokens onto other wallets, in the event that something goes wrong. (So you not going to lose your coins, if something happens with Ledger or any other hardware wallet company)

Hardware wallets are VERY secure, compared to Exchanges and Wallet providers that gets hacked every other day. (Even the big companies, like Mt Gox)

Exchanges have employees working for them and these employees can be forced by criminals to help them to get to your coins. The hardware wallet manufacturing process takes the "human" element out of the scenario and this helps to protect your "Private Key".  ;)

Not all people can afford buying a hardware wallet, but there is another option, non-custodial mobile wallets. So you don't have to keep coins on exchanges.

Exchanges are good for storing crypto, but people are just trying to be careful and avoid losing their coins. When your assets are stored on exchange you will be taking huge risks since the private keys are not in your possession. And another thing is that not all exchanges are really secure and not all of them gives return on investment.

Coinbase is a very good exchange , they have a really good security system, and a huge part of the customers’ assets are kept in a cold storage, and they also have insurance. I am very sure that they are good, but the problem is that they don’t give returns on investment. The crypto.com you have mentioned, I don’t know the level of security they have on their platform.

Using a non-custodial mobile wallet will be enough for them who can not buy a hardware wallet, and as long as they can know how to protect their wallet, their funds will not be in danger. But storing coins on the exchanges will give you risk from the hack or other things because the exchanges will not always secure. But if people still want to store their coins at the exchanges, they need to remember the risk and don't store in a big amount to prevent it.

Backing up money on electronic exchanges can be good but big crashes like MTGOX, BTC-E can happen even though we have found ways to bind many layers of security above.
Mobile storage forces people to update their software more frequently for both the phone and the wallet app. Older equipment may not be safe.

Binance being the number one exchange can pay, but we don't know if majority of their assets get hacked will they still pay, and it will take months or even years like what happened to Cryptopia and Mt Got and what if you need money for emergency, you are always on the mercy of the exchange, I still and always believe that you should always responsible for your key when you are investing in Cryptocurrency, this is the true essence of decentralization.

It's still risky but you have moved me from generalizing the dangers of holding money in an exchanges, because I really don't do that.
8% APY is still kind of "not really yet" worth the risk, taking note that even reputated exchanges like Binance got hacked just like last year.
It's up to anyone's decision in the end anyway. I wouldn't mind leaving the minimums of my deposits there because I'll extract the profits to a separate wallet anyway.

You can set up a non custodial wallet (12 or 24 key word seed), send funds to that wallet, then delete the wallet (ensuring the seed words are safe) then re-access the mobile device wallet at a later date.  You could even set up a time locked transaction to send funds to that wallet address at a predetermined date into the future.

Yes, it is true, Binance compensated the users for the stolen money and may be the only exchange that did so, as for the rest of the exchanges, they refused to compensate the users.
As for the  interest rate that he talked about, you cannot get it by simply putting your currencies in the exchange, but you can get it only by staking your currencies, and this requires activating the KYC verification as I think and freezing your currencies for several months or a year.

8% return is still a decent amount for just storing our funds but the security is the biggest concern when we are in exchanges, I won't do that personally but lot of people think smart and store their cryptos in exchanges but they should be careful with the hacks and there is no exchange is exception to these hackers.

Indeed this is the main issues we can store our crypto in the exchange, in fact there some also offer interest that catch those users to join and registered in their exchange or wallet. The best thing that we can do in this matter is we shouldn't trust fully as we all know there some exchange invades by hackers and also best is use exchange that is proven and reputable one in this industry.

Instead of debating which is better, it would be better if you will just put your Bitcoin in your Cold Wallet and at the same time put it in exchanges.

I can say that holding your Bitcoin in an exchange is better in terms of profitability but in terms of security, they are the worst as we saw many exchanges getting hacked overtime. Binance, Bithumb, Cryptopia in the past and I know that more and more hacks will come in the future.

No need to explain in Cold wallets since we knew it as one of the safest wallets we have right now but if you want your Bitcoins to have some profits then maybe you can risk it by putting and holding in an exchange.

Okay, good for you. Can you guarantee that it will always be the case? Are you 100% sure that they will never shutdown their service permanently or temporarily due to hacking attacks or scaling issues? No? That's exactly the point of having your own funds in your control. You don't have to put your trust to the services provided by these central exchanges. You can move your funds anytime you want.

That crash at the exchanges is not something that we expect, and I guess people were not expecting it too. But that really happens, and people could only regret it without having a chance to get their money back.
If you store in the mobile storage, and you don't have to install too many apps. I think you don't have to update your mobile phone too often because if you just install the mobile phone wallet, the wallet developer itself will not release the update too often.

I will prefers the security feature of hodling my bitcoin to profitability feature of it, huge amount of coins were lost in those hacked exchanges the past years, Cold wallets safety is uncompromising and safe then why risking a huge amount of coin for a paltry interest? knowingly that any trader or investor fund in any exchange is at his or her own risk then why not keep it in where the hodler wouldn't worry about any hack,

Its upto the investor's choice to choose security of their assets or profits from those assets plays priority in their investment.IMO those 8% can be earned even by holding in our wallets and sell them only when they see profits so they reduce the risk of hacks by this strategy.

Cold wallet is always better than a crypto exchange wallet as only you control your private key, however I trust some crypto exchanges such as Kraken and I'm fine to hold some cryptocurrency there, especially if you trade regularly.

The risk on every form of storage needs to analyzed very well. I have been scared of the outcome of careless holding a hard-wallet keys, the theft may never be noticed, just a visit to the storage could steal all. Asides theft, death, accident and natural disaster could deprive the owner the access to the asset forever. We have many exchanges and many hack but some exist after hack and users fund are safe, maybe we stay with many exchanges with reliable security.

if you want to keep a percentage or all of your coin with a 3rd party, even with interest, be my guest. advising others here to do so? wrong.

you should learn why bitcoin was created as you seem to have no idea.

that being said i leave a small amount parked on exchanges for convenience and to catch wild swings in price and have ladders set up for that. but thats a different animal. i know i could lose it all; exchange gets hacked,  my account could get compromised, exchange suddenly decides it doesnt like me, many other ways to lose ones coin, and now youre at the mercy of the exchange. good luck with that.

i lived through mtgox. did you?

I do not keep my Bitcoin and crypto on exchanges for fear of security. It is true that these platforms are designing strategies so that users earn interest if they leave their funds in it.
I know the high level of security of Binance, Hotbit and KuCoin of their platforms but I have not yet dared to leave my funds and participate in these programs.

All types of wallets have their own advantages and disadvantages as well. Many of the users have correct arguments, security, convenience, advantages and costs of the various wallets. So it's better not to look for justification here because for me the needs of each user are different and we just adjust the type of wallet according to our needs. Although regarding storage security I prefer a could wallet because we have the authority of our wallet and no other party, and also from this type of hacking and negligence it is lower.

If our reason is just to earn interest from the funds, we can leave it on the exchanges, but we need to store the other amount in a separate wallet, which is not related to the exchanges, to control the funds without any third-party. The exchange has its own reputable security, but we should remember that they can not always protect their hackers' exchange. We don't want to see the hackers will steal our funds, and we will only regret by storing in the exchanges.

Disagree on a philosophical level and you won't find many fans of that opinion here BUT for the general retail user, or even institutional level users, who don't actually use Bitcoin but hold, perhaps own wallet (paper even) is even better than hardware -- if you protect it with right measures and don't want to trust a company like Ledger.

Even I might be tempted to part with some of my BTC for 8%APY if it were regional bank (rather than a national one) that is insured and guaranteed by say, the EU instead of just a single government.

But I can certainly understand why most people, judging from the many queries from people who lost their accounts and can't recover private keys, would prefer keeping shit safely tucked away and guarded by someone else.

I agree with you, storing your crypto in exchange is better than using cold wallet, because and the end of it there will be massive profit in the exchange than cold wallet.
I can identify some exchange  here like Kraken, Coinbase, and paybis are well trusted exchange you can trade and earn more profit without fear of hacker.
Not everybody know how to protect their wallet very well, but everybody know how to store bitcoins on exchange that will profit them. Business is all about risk, storing your coins is a risk but after the risk there's a huge profit and the end of it.

Exactly, well said.



Not only you're right, Binance now has lowered its interest rate % offered on USDT, it shows they are trying to keep things stable, that's what solid banks do as well - reduce the rate on savings, increase it on lending - it's not a very scrupulous step but it's necessary in order to keep things stable so kudos to them.

Once again it's important to state not all exchanges are safe but those who take precautions like Binance are much more solid than the others.

Truth to be told many people are so used to the fiat system in which you let a bank store and protect your money that despite this whole market being built under the premise of being your own bank people want to go back to the old model and it is obvious centralized institutions like exchanges are happy to perform that function, that is why exchanges which technically should be a place to just exchange your coins have become de facto banks.

And this is very troubling because as we know exchanges are hacked all the time and once you lose your coins in this market there is no way to get them back and while some argue the exchange will cover the losses that is only true if they are at fault, if you are hacked because of your own mistakes then those coins are gone.

Exchanger has also risk and anyone can lose his money forever. Do you think all the exchangers are safe and trustworthy? A exchanger can run away at any time and besides that a exchanger can be hacked.

There are so many examples the exchanges failed and customers lost big, I never store any crypto on exchange, only trade there.

I think it depends on the purpose of keeping money and how large or small money is to choose how to store cryptocurrencies.

If you want to store large sums of money or keep it for many years then you should choose a cold wallet

If you want to store money for short-term trading for a few weeks or months or you only have a small amount of money, storing in exchanges is not a problem as long as you implement AML / KYC and have a lot of security. big for them. The most unlucky thing that could happen was that this exchange was closed.

You seem to be completely forgetting the idea of hardware wallets there is no centralized company and you don't have to rely on such 'company' for your faulty device either. As long as you have seed words the coins are yours, there is no one else.

But sure if exchange has insurance for user funds then go ahead put there.

That is the last thing i will do ,I have watched hacking for years and also exchange taking our Funds.
there are also a exchange that charge you per month if you have no activities or trading that doing in their platform.
so why would i trust exchange?
I have my own storage and i also have wallets.

Hope you will not become a victim in future so you need to change your stand.

Yes of course it is good to store on the exchange in my opinion, cold wallets are safer. Yes, they can fail, but exchanges are not immune to hacks and fraud. Everyone should choose their own way to protect their funds. When I first started studying cryptocurrencies and blockchain I kept my coins on one of the popular exchanges. Unfortunately, it is no longer there as it was hacked. Asset holders cannot receive their funds. The courts have been going on for several years.

If you are ready to trade your privacy, security and control over your money for some "8% APY", you aren't a real Bitcoiners, you're just an investor who wants to make more gains at all costs. Bitcoin has value because it's not like banks, if you start turning it into a bank, it loses its value proposition. Like, one of the driving arguments in the recent years was that Bitcoin is a digital gold, but if you keep your coins in some online wallet, you don't have digital gold, you have an IOU for digital gold. And we all know what happened to IOUs for physical gold.

Im sure that cold wallets or hardware wallets are still safer than exchanges, their might be some issues in offline wallets that a lot of people encounter, and also there are some issues too when it comes to exchanges.

Still their are a lot of exchanges that you could also trust to invest your funds, also the only advantage in exchanges is you could convert/buy/invest your funds in other cryptocurrency that could potentially increase its market price, but when it comes to security hardware wallets/offline wallets are surely better than using exchanger as a wallet and it is not advisable when it comes to long term investment.

Probably because not all exchanges could sustain the market a big dump in the market could potentially bankrupt the exchange's website.

And despite this people still insist to store their coins there, on the surface this may seem like a contradictory behaviour but what happens is that many people never really think about the consequences of their actions and they do not believe that they will get hacked and will lose their coins, so they keep their coins at the exchange believing their coins are safer there when in fact the opposite is the truth.

Any hacker knows that exchanges are holding a fortune and as such they are always trying to find a flaw in their security they can exploit, while in the case of a user as long as he is not a whale and he takes the time to secure his coins then the chances he gets hacked are minimal.

In my opinion, those who have large amounts of crypto should use the cold wallets. What happened to cryptopia discouraged me
from storing large amounts of crypto on exchanges. As the number of exchanges successfully hacked grew, even big exchanges
like Binance has been hacked before. So it is not feasible to take risks for small profits.

I can't argue to this anymore and what exactly OP saying is not recommendable. Just for the sake of low profit you decide to risk all of your assets by leaving it on the exchange? Your crypto, your money. Don't let someone controls it from you—we have given the opportunity to hold and control our own money once you join in the blockchain technology

^ That is freedom, a freedom that you are the one who controls your money, not someone else, not by the exchange. If you believe the saying in most crpyto enthusiasts, not your key, not your fund. It is a simple logic, why you will trust exchange. There are various of scam report of exchange that has been scammed or compromised the site, it has been breached the security. If you have left your coins there, say bye-bye for them you will never recover it. Colds wallet is much better and use hot wallet if you have a regular transction using your coin.

I don't agree completely with the OP for few reasons.
While it's true that Exchanges like Binance, Kraken etc.. are becoming continuously sophisticated, it's very far to say that cold wallets like Ledger, Trezor etc. are going to be history.

It's completely false to say that you are relying on a centralized private company when using a such cold wallet like Ledger.com and completely wrong to make comparison to Netscape.
Therefore, let me give you some clear facts about Ledger (also valid for Trezor and other similar devices):

• 1. You can recover your accounts on any BIP39 compatible third-party wallet, not only on Ledger devices. So you will still be able to access your funds even if Ledger disappears.
  
• 2. The Ledger device is not a centralized device as it does not connect to Ledger servers but to the Blockchain. Even if Ledger closed you would still be able to send and receive your digital assets through Ledger application and other third party platforms.
• 3. You will only need to keep your 24 words recovery phrase and passphrase (if set)
• 4. So as you can see, these cold wallets (that could be used also as hot wallets!!) are very secure and nobody will freeze (depending on which digital assets you are using - that's an other topic) or steal your assets that easy

Exchanges are great places to trade your digital assets, but NOT to keep lot of funds (if yes, then for trade only and not for long storage). I wouldn't recommend doing it. I read so many bad reviews on Exchanges like Binance, Bitstamp, freezing money of customers and asking them to provide information they can't really provide (like screenshots of the very first transaction you did 3 years ago) or events like forcing non-verified users to submit KYC, not to mention about the recent hacks.

If you want to have 100% control of your money, Exchanges are the worst place you can go for.
I don't think its worth the interest paid by some exchanges to store your money for long term on their wallets.

Agreed with those keypoints above that you had mentioned about Hardware wallets and i dont see on why op did really consider out that it is much better than exchange wallets in any sense.
When it comes to security then theres no doubt that hardware wallets is always been a better choice.It might have some cons but this is way more better than storing your coins on an exchange
for a long time.As mentioned you wouldnt know on when theyll do ask for some verification specially if you have stored big amounts on an exchange wallet.They do have always the power to ask
out and changed up their minds if theyd like to.So i dont see the point or kind of mindset on op do had to him to consider that hardware wallets are shit than on exchange wallet ones.

If you were wanting to be extra secure you could hide your 12/24 words out in the open - quite literally.

Select 12/24 outdoor locations that you can memorise, spray paint a single word in each location - as large as you can - wait for a passing satellite to photograph the word - verify via Google or another aerial mapping service the word is legible (and that it is archived) - Just ensure you don't just leave 12/24 words - do dozens, if not hundreds of words, that way no one can collate the seed words and try to work out the correct combination.  (even do some of the words in duplicate locations to further confuse anyone trying to unlock the key)

You then wouldn't even need to keep the words in a "secure" location for anyone to uncover and copy because there wouldn't even be a single copy of the list.

That is the way it should be but many times people take the most conformable option over the most secure one, it is true that an exchange wallet can be very convenient but you are exchanging your security over that convenience, and while there may be circumstances that may make that trade worthwhile when it comes to cryptocurrencies I do not see how, except for trading your assets, leaving your coins there for the long term can be justified.

There have been many examples on the past of people losing their money due to hacks or irrational KYC procedures and yet somehow we are to believe exchanges are a better option than cold storage? I am simply not buying it.