Bitcoin Forum

Everywhere I read tells me it is not a good idea to leave BTC long term at an exchange wallet.  However, the same people who say that recommend crypto interest earning accounts such as BlockFi or Celsious.  Doesn't make sense to me.  So I should not trust Coinbase or Gemini yet I can trust BlockFi or Celsius to keep my crypto safe?  What????

When you do talk about safe then this would be particular talks about on your coins to be on your own personal non-custodial wallet and once you have
let or stored those coins on 3rd party providers or services then those coins arent your completely and does remove the word "safety" that you've been
talking. About interest on annual basis then they do over 4-5% as far as i remember which you do seem to be worthy on the risk that you've been putting? I think not.

This is absolutely true!

Not your keys = Not your coins.

This had been a common line that had been said for how many times and asking about trust then its up to someone since its his money then let him do whatever he do wants but at least we do give out our best
advise in related to this.

Do not store Bitcoins or anything of value on those websites UNLESS you have orders open.

Otherwise, you need to bring those coins to your own keys.

(mind you, this post is coming from an altcoin exchange secretary (https://freebitcoins.com/xchange/).... Don't leave freaking coins on exchanges!)

Buy a trezor. https://trezor.io/ (https://trezor.io/)

Are people suddenly abandoning the idea of buying the dips and HODLing?

I don't understand why people are jumping into all this lending and DeFi crap. It makes no sense sending someone to hold for your Bitcoins all for just a less than 10% interest per Annum. On top of risking your assets with a third party, they are going to give you peanuts as your profits.

A person who bought the deep in March 2020 when BTC reached around $5K and HODLed in his safe noncustodial wallet has already made x8 (800%) profit  8) as of today while the DeFi gang is still waiting for that 10%  :(

You're mixing up two things, that is common for someone who is just starting in the investment world, let alone in the crypto investment world.

Let's roll back a little bit:

Interest earning accounts - This term has existed almost for as long as (traditional) banks do. Basically they assure you that, as long as you keep your money in a particular account, the bank rewards you a % in a way of money. The nature of this account is that your money is safe (you're guaranteed not to loose it) and you get that little % as a reward. So imagine that you have 1.000 € in an account with an interest earning of 1 % : This means that whenever the time of the contract reaches it's due (let's say 1 year) you'll be rewarded 1 % based on your account ( so you'll end the year with 1.010 € ).

Be aware that my example is a very simple one. Some banks demand more than just keeping your money and such, but as an example that will do.

Now some exchanges also do these type of "deals" regarding BTC. You deposit your BTC in an account and they'll reward you some interest after a while. The main problem with this methodology is the risk involved vs the (low) reward : In contrast with a traditional bank, if something happens to an exchange you will never be able to recover your investment since you do not own the private keys associated with the wallet where they are stored.

Look at this from this angle : Are you willing to leave those BTC (whatever the amount is) in a random exchange for 40+ years just to benefit from a small interest earning? The risk / reward seems feasible for you?

I tend to stay away from low interesting earning account simply because the traditional banks are the ones that end up winning while you get your money "stuck" in some bank account, milking away that pesky 1 % fee. I tend to look to other investment vehicles as an investment (which end up being more risky understandable).

My opinion for your particular case? It's just not worth considering the risk involved. Just get yourself a desktop wallet (Electrum) or if you're looking for an "upgrade" in safety just get a hardware wallet - I recommend Trezor.io.

You can find an overall list of wallets here - https://bitcointalk.org/index.php?topic=1631151.0

Hope I was able to show you the risks / rewards you're looking at. If I wasn't clear in any phrase just let me know.

I have some Youtube and Twitter BTC experts who got me into BTC and who I trust totally.  Yet some of them recommend people to take advantage of the passive income with BlockFi.  I thought it was crazy for anyone to trust their BTC with BlockFi.  After reading all your replies, I am now 100% convinced.  My BTC stays in my cold storage.  Thanks. 

Well, that is a golden rule of a good cryptocurrency holder, all of you have a point here. You must have the key and never trust exchange or even the custodial wallets, it is very simple if you don't have the keys, your bitcoin perhaps at risk. Choose an open-source wallet that you have full control over the key, at this point, you perhaps safe but it depends on how you will keep your key in a safe place. However, regarding the exchange mentioned by the OP, I did not try to use that exchange but for me, I will do what I have said above.

If the service is decentralized, I wouldn't mind storing my bucks there. Storing your funds on a centralized platform for a long time is indeed a mistake.

What people sometimes miss is that we're not all experts and sometimes things aren't the way they're advertised. One good example is how VPNs are advertised as anonymous when they certainly aren't. AtomicDEX (now AtomicDeFi) seemed to be 100% decentralized when, in fact, it apparently isn't really.. although they do advertise it as if it was.

This is why some people unknowingly support something they are actually against. It's called misleading.

Lol, there's are some issues in blockfi about delayed withdrawals and lost deposit earnings. So, that's basically something you don't want to happen with your Btc sitting in a custodial wallet. They're holding your Btc and they can make it disappear If they want while you're sleeping.
There's no safer wallet storing your Btc than your own cold wallet, and I'm glad you did realize that.

Okay lets put up some links or reference between the two and on whats their pro's and cons:

https://cryptobuffett.medium.com/pros-and-cons-my-experience-earning-interest-with-blockfi-c27c133fa6fb
https://www.quora.com/What-are-the-pros-and-cons-of-Celsius

In the end of the day, nothing beats out when you are having the full control of your funds.

In my opinion I suggest instead of holding coin you invest of crypto investment platform like hotfxm,expertoptions,fexcoin which use reliable indicators

I never recommend any custodial solutions, be it exchanges or interest-earning wallets. That said, there can be more and less risky ways to hold your coins, even among custodial wallets. If you choose a small, less popular exchange, the risk is higher. Probably the least risky is using an exchange or any custodial solutions to perform fast transactions and withdrawing immediately.

Yes you have learnt well; it is not advisable to store your bitcoin or any other crypto currency assets on your exchange account because it is centralized and not your own wallet; the best way to store your assets is on your paper wallet or your cold storage and also ensure not to share your keys or phrases loosely.

In addition, to what explained already one of the concept of Bitcoin is to make each individual is own bank and never to trust third parties. However, keeping coins on exchange is just like trusting the third party but you can still keep some coin you can afford to loose on exchange site that integrated SAFU.


I honestly don't trust coinbase ever since the ask they lock user account for no reason and force KYC but those fellow that gave you the advise are after profit cause blockfi is also a third party platform and it trying though is not a bad idea but you should only put the amount you can afford to lose.

It's SIMPLE:

Trusting BlockFi or Celsius is risk versus reward. You are getting XX% APY in return for your coins being there.

Keeping coins in exchange without staking is laziness and stupidity. Taking the whole risk without any reward.

Exactly, but there are some exchanges that we must be considered as a safe exchange but not on storing your bitcoin in a long term. Safe for a short period of time because they had enough reputation build, safe because they had a SAFU offered, safe because they are widely accepted exchanges and has a large volume of traders. In this case, I will consider this exchange is safe for a moment.

But if we are talking about storing bitcoin for how many years on an exchange, no way. I rather choose a bitcoin wallet that we have a key to or a hardware wallet where to store our bitcoin safe. That is a proper storing of bitcoin not on exchange. However, in my opinion, I will never trust this newly popular,  BlockFi or Celsius.

Not Only exchange, Any custodial corporations who will give you an offer to hold your coin on their platform and refused to give you the private key of your wallet is unsecured and untrustworthy. If you gather your coins on any custodial wallet or custodial exchange then they have full control over your funds. They have the ability to freeze/hold/reject or ban you if they want. So don't use any custodial wallet or exchange for holding your coins for the long term. You can use a noncustodial software wallet or hardware wallets instead of using the service of exchange.

I don't think OP knows the risk of leaving their coins on an exchange wallet it's not something or someone you can trust since you have no full control of that account. Plus if the issue tends to last almost to never then rethink what you are planning, OP and now that you have decided to put it on a cold storage then that's better than leaving it to someone's hands.

Holding your own BTC/money is the very essence of Bitcoin. To have a full control of your funds that no one can interfere without your knowledge, please remember that.

I don't think any experienced Bitcoin worth their salt would recommend to store your coins in any of those interest earning accounts. You're probably reading suggestions from some newbies who just repeat things like "don't store coins on exchanges" because they heard them from high-rank users, without really understanding what it means and why it's bad.

Well what about those that do daytrading?  Can't imagine they are sending btc/altcoins/usdt/usdc to their hardware wallet daily and doing it every single day right?  And also with the high fees it is to send now?

In my opinion storing your coin in legitimate wallet is safe but don't expect to make quick profit from holding as the value of BTC might drop because it's not always stable, I suggest investing in crypto trading and investment platform, a few I can recommend are hotfxm.com, fexcoinoptions.com and expertoptions.org

How do you store your coin?

Storing BTC on exchange wallets are not recommendable for the safety might be at stake specially talking about the recent issues that involves hacking of famous exchanges despite of tight security they do have as well as the bugs that is prohibiting users to access their accounts temporarily. Upon encountering such, you will be paranoid and frustrated on how you can regain access to your Bitcoins right? It will be fine to store your Bitcoin into your exchange wallet of your choice if you will be actively using or engaging it into stuffs and not to just store it because you are treating exchanges to be storage wallets. Exchanges and storage wallets have their own purpose and usages so better get stick into it.

Where do you suggest is safe to store coins?

I don't recommend keeping your coins in exchange wallets and at the same time I extend this advice for interest earning sites as well. it is very simple and straightforward - if you don't own the private keys, then it is not your crypto. I am not familiar with the revenue earning mechanism of these interest earning sites, but they look shady for me and resembles various Ponzi and pyramid schemes. Sooner or later, they will vanish taking all the coins with them.

And keeping your coins in an exchange wallet for the long term can be the worst decision you can make with regards to your cryptocurrency holdings. I am saying this out of my own experience, as I have lost huge amounts of coins by keeping them in exchanges.

Then you should just don't consider their recommendation.
But honestly, you should just find what suits you well. If you don't really feel secure of using centralized wallet just find desktop/mobile wallet or hardware wallet.
But if you think the centralized wallet is secure enough you can store there, it's you who decide whether you gonna take the risk or not simply because even if you used a wallet that's not centralized if you can't properly maintain your own security such as keeping away virus out of your computer then you still have the risk.

From all the hacks on exchanges that have happened over the years you should not keep more than you are willing to lose. If you are looking to trade a few thousand USD worth of stuff and leave it on an account that's probably pretty safe. Risking 10k+ because you want to earn interest is not something you would want to do unless you don't care about losing it.

Famous hacks were

MTGOX, BTCE, Cryptopia, many various others over the years. If the exchange exists it will probably be hacked at some point. MTGOX people barely got anything back.

Some of the best methods of storing your crypto are using the hardware wallets. If you are truly wanting to do stuff with interest earning that is all on Ethereum, some of their things like SushiSwap can earn you over 100% APR a year. I haven't looked into what kind of interest you can earn from BTC, have you seen something that is comparable? Might be possible to lock BTC in WBTC on Ethereum and stake with that, that way you always control your wallet.

If you are not doing regular trading then you should move the coins from exchanges to your own wallet. Although there are rare chance that exchange could get hack and all your coins get lost but still there is a risk. We have seen in the past how many small exchanges get hacked and people lose their hard earned money.

It's worth taking a closer look at just why it is such a bad idea to leave you coins in these platforms. Let's have a look at some quotes from their Terms of Services. Emphasis mine throughout.

First BlockFi:

Now Celsius:

In other words, they will hand out your coins to anyone they like, be it individuals, business, corporations, exchanges, investment banks, whoever they like, they won't tell you that they are doing, they won't hold any other assets in collateral for your coins, and if any of these hundreds of anonymous third parties default on their loans, make bad investment decision, scam, go bankrupt, whatever, there is absolutely nothing you can do about it except wave bye-bye to all your coins.

---

For the same reason people jumped on the ICO train. The vast majority of users have zero knowledge regarding the technology (or lack thereof) which underlies such altcoins and projects, and have zero interest in acquiring such knowledge. They simply want profits, and the vast majority will end up holding bags of some worthless token in a year or two. If they had just bought and held bitcoin instead they would be touching all time highs, instead of holding some useless token which is down >95% from its all time high.

Why you want to use exchange for hodling? There are a lot of good non-custody wallets like trust or ownr and people still want to use somey custody service instead...

Well, I think he wants to earn profit from holding his coin on that exchange.
He can do that, but he must remember that he does not use too big money to hold in the exchange because it is too risky as we do not know how the interest can give them profit.
It is better to save the coin in the wallet that you have full control over your coins, so if something happens to the exchange, you will not be a worry.
The only interest that I know is if you use your balance to lend to the traders who need more money to trade.

Some exchange is safe.

But, From my opinion, It’s better to store BTC an decentralized wallet.

I don't like any 3rd party in long term.

storing crypto in exchange is never safe except their exchange have ability to give you private key for each coin/token

For me do not store your bitcoin in any exchange wallet, no matter how many times they will say that their exchange is secure but there is some news that they encounter some attacks from hacker of course but they will recover it in a short period of time depending on the security team skills, better to save it in hardware wallet but be careful not to lose it nor broke it because it will be hard to fix that.

The fact is that if you keep your cryptocurrency on the exchange for a long time, you can lose it, for example, due to hacking, since after all, your cryptocurrency is not with you, but with the exchange.

Not recommended at all because you don't have the full control of your asset. Anything can happen from getting your account hacked to the exchange wallet getting hacked, your account get suspended for unknown reason, forgotting your password and the means to recover the account, etc. If you are not going to use the bitcoin for a long time then send it to another wallet where the private key is in your hand.

If you try the staking feature in some exchanges, indeed, you will flower from the staking you plant. The problem is, we don't know how strong and long those exchanges last? because we know some exchanges even high-class exchanges have also experienced a breach of funds attack which is certainly very dangerous for us to save it. Unlike personal wallets , especially if we use them in hardware wallets, such as trezor. It must be perfectly safe.

I agree with your opinion that it is better to save your BTC in an account that you hold a private key, if it is stored in a place that you do not hold private keys, you may lose your assets by reason of being hacked.

the risk is indeed the same. the problem arise since even this a business profitable (exchange crypto currencies and fiat) there are several risks inside the activity. We have seen both DeFi or exchange get exploited or hacked so there is always the same risks.
and probably this is also the reason behind some high yearly return that some programs are able to provide.

normally some western countries offer a protection for their funds deposited in a third party, but this obviously not applied to bitcoin !!!

I think this is best answered with a question; If you store your Bitcoin on an exchange or any online platform, and the exchange or online platform gets hacked, what will you do? We have seen a lot of exchanges that were hacked and assets worth millions of dollars stolen and that's it, so this means that, you shouldn't play with your Bitcoin and its security, that is to say, you need to adopt every possible means to ensure they are secured and keeping it on an exchange is far from it. Your Bitcoin needs to stay in your private wallet with a private key, this private key in question is what gives you the power to own and control your Bitcoin the way you want; anything short than keeping your Bitcoin in your wallet, means your Bitcoin could be at risk of theft. I don't know about those platforms mentioned like the Celsius etc, but keeping on an online platform and/or interest earning accounts is not a good idea and keeping on any exchange is not good as well.

Storing crypto in exchange wallet for long term is not a good opinion. But if the exchange hacks all your funds are lost.
So, keeping funds in online wallets is a good technique. But you have to keep your private keys at a safe place. If you lost your keys then there is no method to recover your wallet. They are decentralized wallets so, you are the owner of your wallet.

I first lost my coins in 2013, when Instawallet shut down. The again I lost my coins in 2014, when Mt Gox went down after the robbery (I have filed for reimbursement to the bankruptcy trustee, but as far as I know, none of the former users have yet received any of their coins). Then once again, I lost some of my coins (mostly LTC and BCH) when BTC-e/Wex.nz was closed down. And then in 2019, I once again lost some of my coins when Cryptopia got hacked. The list is quite long and my case is a classical example of someone who never learnt a lesson from their mistakes. If you want to end up like me, then you are most welcome. :)

Never ever trust third party platforms hold your coins, you might lose it all. Its very tempting to how big the interests they give when you stake your but always remember that you don’t have full control over it. Just store it in your non-custodial wallet and let it grow anyway as years go by.

Same people who also want you to just keep your coins on your personal wallet that you own the private key, same people who teach you to trade on exchanges. I don't see myself trading every day and then withdrawing everyday as well. But you can do it on wallets that allow you to connect on DEX like the tokenpocket. I'm sure most of us are aware of these kinds of wallet already.

Always consider the saying "not your keys, not your coins". If something happened to your account, the exchange could possibly lock up your coins and demand you to submit KYC and put you so much hassle. There are many cases here that they leave their assets into their exchange accounts and when they got back there are problems rising up such as locked accounts because of inactivity, IP conflicts, and other problems. If you plan to hodl some bitcoin and leaving it for a very long time while you consider security at best, A hardware wallet such as  ledger or trezor is one of the best options you can go.

Yeah its the golden rule but there are still people whom do fail to do even with this very basic idea..This is why when the time they get hacked or scammed then
thats the time they do really make out some learnings and make some regrets in their entire life.People wont learn or realized if they dont experience those.

Keeping those keys should be your main priority because this is just like giving your pin code into your own atm wallet card.So basically
showing off these sensitive informations isnt a must thing for other people to see.

I have seen a lot of people defending the cryptocurrency interest sites. But I have never seen them explaining how these sites make profits. Bank deposits provide us with an interest, because fiat currency is not protected against inflation. Interest payments make sure that the net purchasing power never decreases. But that is not the case with cryptocurrency, and therefore there is no logic in getting interest payments from these sites.

And even if everything is legit, how these sites are able to keep their operations viable? Either they are making investments with the coins, or they are lending out to others at a higher interest rate. Both the options are highly risky. Investments can fail, with volatile assets such as cryptocurrency. And the chances of default for cryptocurrency loans are much higher than the same with fiat.

I think storing crypto on interest earn sites is as risky as storing coins on exchange. And both variants are pointless. Do you really believe 1-5% interest will make you reach? Or you will be able to save a lot of money and time by storing crypto on exchanges? There are so many free and secure wallets like Exodus, Trust, Guarda and ownr, for example.

Same principle, not your key not your coins. Exchanges and such websites are prone to attacks which only hurts the clients that are storing their coins their. Well the 1-5% interest is a lot especially for the 5% part, in my opinion you can use that to make more modes of cashflow but if you are only relying on that then that is a different story. But the problem with these crypto investment sites is that they are as volatile as the coins that they are storing and selling to you to invest in their site, you could lose your money real quick and other legitimate websites have been known to back out with the money from their clients.

If there is a market for locking capital to start earning interest, then I believe Lightning should be pushed for this, with the cooperation of developers to build products for it. A pool for “staking” your Bitcoins to open channels in LN, increasing liquidity.

That's part of the risk. You earn interest through those exchanges that you will participate but once you deposited your coins to them, you're no longer owning them. Yes, you're part of their program which allows you to earn interest but you have to understand and just agree that it's no longer yours once it touches their exchange.

There are wallets that are allowing you to offer interest upon holding it. But that's not lending, it's staking just like in Ledger, trust wallet, and other wallets as well. At least with those, it may not that be much of interest but you hold your coins.

The main reason why it's not good to store your BTC in an exchange is to prevent from getting hack, the saying is, "not your keys, not your BTC". So, if the site is hack, you will lose your bitcoin and will not be able to recover again as they are not like banks where they has an insurance, and if ever you'll be able to recover, it will take time and will take a lot of process, so to avoid this just store your coin in your own wallet, a hard wallet is recommended.

Of course there are benefits in storing your bitcoin in exchange wallet, but it comes with a high risk too.

What about daytraders?  No way they are withdrawing all their coins to their hardware wallet or other type of wallet daily right after trading since they trade next day?

Storing Bitcoin on exchange is quite risky if you are planning to hold Bitcoin for long term. As we heard several times hacker hack the exchange so its risky. Apart from this I would also recommend you to use hardware wallet to store your Btc safe.

The word safe applying to crypto and exchange is kinda subjective in a way and it will depend sometimes.

I myself put some ETH in Crypto.com to gain some interest. Yes I know the risk of it and I know the quote "Not your keys, not your coins" but since I've trusted the app and the site, I risked it and put some ETH on it and now earning ETH.

All or most of us here are saying that you should not store your coins in an exchange but the truth is it will depend on you. Interest earning accounts such as BlockFi or Celsius might have risk on it since you aren't the one who is holding your coins but them but I think putting it there for some few months is good but still there is the risk on it that it might get down or it might turn up being a scam. Know your risk still.

There is an article about a lot of people getting scammed because of storing their funds at the exchanges so you should avoid that thing, Holding for a long term is such a great idea of earning money in the future, that would give you a huge amount of money but make sure that you are using a legit and trusted platform, never store it in exchange it is better to store it in the custodial wallet for more security.

It is absolutely not a great idea because base from one of my experience, one of the exchanges that I have left my Cryptocurrencies at had suddenly shut down. It was really surprising because that Exchange website was one of the websites that has this very friendly user interface and its easy to learn. Their shutting down was due to the lack of volume coming into their website and that was their end of it so I guess its really not suggested to leave your money or Cryptocurrencies at something that you would not have to visit weekly.

If you have a read of my post on the previous page where I quote their Terms of Service, it makes it clear where their profits come from. They either lend our your coins to unspecified third parties, or they invest them in high-risk options and vehicles. They collect profits from loan repayments or investment returns, and pass a small percentage of that on to you. It's a great set up for them, since they use none of their own capital, but they still take in profit. All the risk is assumed by the average user, who gets a measly couple of percent returns, while BlockFi (or whoever) keep the majority of the profits for themselves.

Correct. The risk is huge, the benefit is tiny, and mostly you are just making profits for the middleman.

No, but they aren't keeping all of their coins on an exchange, only what they are actively trading. If you are day trading then storing the coins you are trading on a centralized exchange is a risk you have to accept, but most will withdraw the bulk of their funds which they are not actively trading to their own wallets.

It's true no one from internet can trust your money with even exchange wallet putting your money into it? Hmm i don't think so ever since i don't stock my bitcoins i always hold my bitcoin the one that my country create so called a good "wallet" or somehow i have a hardwallet where i can stock them food good why? because when you read those terms and condition/service of some exchange website you can read that they are using our "coins" into something to earn and of course to make them a good profit as well if you're using BlockFi  or Celsious then you should have time to read those terms and see it for your self which one is deserve your money.

Well, the return(ROI) that the legit investment platforms offering for holding BTC is so small that I don't think it's a very good idea to use them instead of safe standard hardware/software wallets, as long as you're not using online web wallets you would be way safer holding your coins in your own wallet which you have the private key to, instead of some random platform that could just go offline and run away with your funds anytime really.

It gets even worse when you think about the fact that you're going to use them as a bank for holding Bitcoin for long-term while as a matter of fact most of them are not in anyway as trusted as a bank or a secure decentralized network(your own created wallet).

I think if you're looking for some side profit while holding your bitcoin in your own wallet, it would be better to just set aside a very small portion of your Bitcoin for trading and send them to exchanges to trade with them, this way you get to feel comfortable holding your Bitcoins in your own wallet while you're making some small profits which are likely to be still way more than what these investment platforms offer.