Bitcoin Forum

Pardon me if I am digressing, I am still in the learning process.
I have been reading about  Bitcoin since i joined this forum. I learnt that decentralization is a unique attribute of Bitcoin. And this attribute permits bitcoin users to have total control over their money and be their own banks.

From my research recently, I have come to realize that a lot of bitcoin users are still stuck with the traditional idea of saving money with a central authority. Importing this idea to a decentralized Bitcoin, has led to the invention of bitcoin banks, exchanges and custodial wallets. Now, as the day passes, more bitcoiners are becoming centralized.  Is there a club or group of only people who uses bitcoin the Satoshi way, I will like to belong here.

I do not want to use bitcoin the centralized way, I want to have total control of my coins and be my own bank. Is this difficult to achieve? Are there prices I have to pay or is everyone eventually moving to the centralized way?

Decentralization is a feature introduced with Bitcoin, allowing anyone to fully control their coins. You have the option to use Bitcoin in a centralized or decentralized manner. But it's important to note that Bitcoin was originally intended to be decentralized. Satoshi's primary goal in creating a decentralized currency was to empower users to act as their own banks, keeping their funds independent of governments or centralized entities. Despite this, many Bitcoin users today store or transact through centralized entities.

It not difficult to achieve mate, all you have to do is stay away from any centralized body. It's your choice and there's no price to pay. Not everyone will move to centralization as Bitcoin is meant to be decentralized.

Consider people who used Bitcoin in centralized platforms as lazy and ignorant users. Bitcoin itself is a freedom but people leave the freedom behind and chose after the value it add to them and as long money is made, they be like "who cares"?

The fact that the rest chose to ignore decentralization, that's there problem, you can choose your own way, run your own Bitcoin node, buy a hardware wallet and be your own bank and support the network by running the node 24/7, you are adding value to the network and those who chose to use the centralized entities can continue to hide their password from a place they don't even own the private keys.

Fear and the issue of not trusting themselves and their knowledge with the amount held.

Happened to me when I had a pocket full of cash from a sale and I immediately rushed to an ATM to deposit it to my account rather than going around with what was one year and a half of rent money and I don't see it being that weird for users who are afraid of viruses, that lack technical knowledge that don't trust their roommates and many more cases to feel better knowing the coins are in somebody's else care, despite making the mistake of confusing a Cex that might be run like FTX was with a bank that at last is FDIC insured.
It's not the way it should be but blaming somebody for choosing the easy way of escaping responsibility it not either either, I have done thousands of tx so much that my wallet started freezing my computer when loading and I still triple check every address, every fee, the messages with the client, and so on, some guys would simply not want that stress.

You can do anything you want. Bitcoin by default allows you to hold your own money. There is no club you have to join haha. You just send your bitcoin to your own address. That's it.

People use centralized services because they are used to them and care more about convenience that taking full advantage of Bitcoin, or for a lot of people they don't even know you can store bitcoin yourself. But in general most people are gonna choose convenience, so it is no surprise that lots of people choose to keep their bitcoin with custodians rather than do the little bit of effort to make a bitcoin key-pair and send the transaction, and then keep their private key safe and secure. As more and more of the general public buy Bitcoin, more and more people are going to be using holding their bitcoin with custodians rather than themselves.

We can educate people all we want, but most people are still gonna choose convenience of 'banking' their bitcoin with an institution, even if its not particularly smart or safe. All you can do is decide what is best for you, so just make an address and send your bitcoin to it and you're done.

There will always be people that will use/hold BTC in a centralized custodian, period. Especially those who don't have the technical knowledge to secure their own coins via self-custody(mostly old people), and those who are going to declare their holdings to the IRS anyway so they hold the BTC through ETFs instead to decrease complexity with taxation.

What's important is that we have the option to hold via self-custody; regardless what other people think.

The concept of centralized exchange platforms is contrary to the decentralized approach in which Bitcoin was founded. Centralized platforms are considered like banks, with KYC and AML procedures and strict policies. They are the primary controllers of your assets and your private keys.

Although many decentralized Bitcoin wallets are available for free, the most secure are hardware (cold) wallets that are not connected to the internet and can be purchased for a fee. Custodial wallets, on the other hand, are not safe if the centralized exchange gets hacked, users' data is collected, and their privacy is compromised. However, CEX users might be inexperienced or not fully aware of what they are doing, prefer using features like P2P trading or other types of trading, or want to take advantage of the offers provided by these CEX platforms... These may be some of the reasons besides their laziness.

I can think of the following reasons why users prefer centralized services

• Arguably centralized services are easier to use.
• In some cases centralized services have lower fees when transferring crypto between user accounts in the same platform.
• Almost always centralized services have lower latency when transferring crypto betwen user accounts in the same platform.

For new users the first point (easier to use) is what attracts them to centralized services.
For some experienced users (e.g. daytraders) the second and third points (low fees, low latency) is crucial.

There is an assumption that Bitcoiners wants decentralization. That is false, most of them are in it for the money unfortunately. When you're in it for the gains, you think less about the other intrinsic benefits that Bitcoin offers.

Pin this on the centralized services because that is the first point of contact for many and they stop right there. If you truly want them to take control of their own funds, we have to abandon the regulations and the licensed exchange and services. We all know that is not happening anytime soon.

Are you actually hoping to find one? Because there are multiple platforms that talk about bitcoin just like this forum for example. But there’s no clear separation between those who use centralized exchanges or wallets between those who use decentralized exchanges or wallets. It’s just all a matter of preference and there’s no judgement between others since we all need and want different things.
Nope. lots of us still think that decentralization is something that is offered and thus shall be taken. However these times, the government is keen on observing bitcoin and trying to make it as centralized as possible

I think, everybody have their own different ways of holding Bitcoin to ensure they are making progress in the industry, but those countries that made Bitcoin legal tender use Bitcoin in a decentralized way, because their government is not against it. But if your government is against using Bitcoin in a decentralized way, it will make you to lose all your Bitcoin when they find out that you are using Bitcoin in a decentralized way which is against the law of the country.  Since Bitcoin is not yet legalize in my country, I use Bitcoin in a Centralized way by converting my Bitcoin into fiat money before I will be able to purchase what I want in the country because Bitcoin is not a legal tender in my country for Bitcoin users to use it in a decentralized way.

Is it only you or you're also forcing other people to use Bitcoin in decentralized way? if it's only you, sure you can do anything that you want. But if you're forcing other people to follow what you do, it will drain your life since each person has it's own need.

The reason why most people choose to use decentralized exchange is the trading fees is cheap, you only need to pay 0.1% in centralized exchange, but you need to pay miner fees when you trade in decentralized exchange which cost around $0.5 or more.

The prices to pay people to use decentralized exchange is the money, they don't want to lose their money due to miner fees.

https://imgvb.com/images/2024/05/21/f8f993950b8d5b3b792db7f67c9d6661.jpg

The people are using centralized crypto exchanges mostly because it's convenient. Actually the crypto day traders are the main customers of crypto exchanges. If you aren't a day trader, there's no point to use such service. I don't care about altcoins, so I haven't used a crypto exchange in the last 2 or 3 years.
If you have small amounts of BTC, just setup Electrum wallet on your PC. If you have big amounts of BTC, just buy Trezor or Ledger.
Nobody is forcing you to use centralized services, but buying BTC from a centralized crypto company is a little bit more convenient than dealing with strangers on the P2P crypto markets.

Decentralization of Bitcoin has nothing to do with control or non-control of bitcoins for Bitcoin holders. It more relates to private keys/ mnemonic seeds.

If people use good wallet softwares, to create their wallets and by this get private keys, they will have control of their coins. If they use bad wallet softwares or use online accounts to store their bitcoins but don't have access and control of private keys, they don't actually control their coins.

Centralized platforms are built and provided for people who want convenience and don't want to learn basics to secure their money better. There are always people who want to get convenience and forget or don't care about security and safety.

But safety, security should be first considerations for all.

I believe you only thought the fact is like this, believed it like this and I believe you did not write it base on any on chain information.

A lot of people have different purposes of owning Bitcoin, some want to accumulate and convert to fiat, while some want acquire it and hold as many as they can and possibly use it as a medium of exchange in the future when Bitcoin must have possibly been adopted by a lot of people whereby you can transact with one another without congestion in mempool or high transactions fee.

Though the main reasons for inventing Bitcoin is to stand as a decentralized medium of digital transactions without interference from the government banks and other third party companies but however, you can't control the choices of everyone. Everyone is entitled to what/how they want to go about with their Bitcoins.

Stop caring about how other people use bitcoin, where they store it, and what they use it for...because everyone uses it differently. You just need to use bitcoin the way you think is best for you, that's all.

We all know that bitcoin is decentralized and it is not owned by any individual and Bitcoin is for everyone. So why do we spend time caring about how other people use bitcoin, why criticize them if they don't use bitcoin like us, what right do we have to do that? It's their bitcoin, let them use it their way, and we just use it our way.

These centralized platforms make Bitcoin transactions convenient that's why people use them. In some areas, one might not find a reliable decentralized P2P platform that makes these exchanges important. People are also attracted to these centralized platforms because they invest money do a lot of advertisements. Some people don't even know much about decentralized wallets because they believe that these exchanges are the only means of hodling or trading Bitcoin.


Bitcoin promotes privacy so you might not find a club or organization where only decentralization maximalists converge. But you can locate such people in the forum who share the same ideology. Some members have never done KYC in any exchange because they have devised means of exchanging their coins. In this era where the government is enforcing KYC in almost all crypto-related service providers, it will be hard to avoid this centralized platform. But there are still some decentralized exchanges like Bisq that can help you achieve your goal.

Decentralization has privacy at its core. I am sure people who use or hold bitcoin or other cryptocurrencies in decentralized platforms are very appreciative of their privacy so I don’t think you’ll find an exclusive platform just for them. Many of them wouldn’t even let you know that they in fact hold some bitcoin.

Nevertheless, if you prefer decentralized platforms there’s no need to ask other people about it or try to pursue others. I’ve always thought investing as a subjective approach which is why we should always be making decisions for ourselves.

Bitcoin is a public blockchain with a public ledger so that everyone can check past blocks and transactions. It is not a private blockchain like Monero and there is no absolute privacy with Bitcoin blockchain.

The advantage is if you use a non custodial, open source wallets to create your wallet, offline, and don't share your public address anywhere else especially on Internet, nobody will know that you are owner of that address and nobody will know you own bitcoin.

It's very first step to gain privacy but next steps will be achieved by how you use UTXOs as inputs for sending transactions out and whether you use Coin control feature and changed addresses for receiving bitcoins from senders. It's a complicated procedure to secure your privacy and along the way, if you make mistakes, your privacy will be broken.

How to spend specific UTXOs in Electrum wallet (https://bitcoinelectrum.com/how-to-spend-specific-utxos-in-electrum/)

Choosing to use Bitcoin means we want freedom over our money.
The freedom we get because we are in full control has its unique nature, so its use is very different from other payment systems.
The use of Bitcoin can also be used as an investment if the user desires this.

It's not difficult to achieve it. To do this, you prepare a wallet and get a public address as an address for receiving and sending. Then save the private key or seed phrase properly and make sure it is stored offline. Be careful in public spaces.

Keep learning about Bitcoin. We fully support your efforts.

In the early days of Bitcoin, I think some users were really up to keep Bitcoin as decentralized as possible. They seems to be outnumbered already and some are just shying away because users are becoming used to the centralization.

Maybe because the idea that Bitcoin will not grow with out the regulation of the government so we gradually get used to KYC already, we are now INSTITUTIONALIZED.  ;D

There is no specific group you need to join or pay any money to use Bitcoin in a decentralized manner, all you need to do is find the right wallet and use that to hold and use your Bitcoin. The wallet should be a non-custodial one such as Electrum (https://electrum.org/) so that you can be the only one having access to your funds and there are no third parties involved. If you want more security for your coins, you should go for a hardware wallet because they tend to be safer than online wallets.

Choosing custodial wallets or centralized exchange platforms to keep your funds is a choice that some people make. They either don't know how to use a non-custodial wallet or they trust those wallets and exchanges too much that they feel completely safe when their coins or assets are stored with them, however, it isn't considered to be very safe for several reasons including hacks and exploits.

This is your choice, my friend, no one is forcing you in any way. The situation where the decentralised Bitcoin can be used in a centralised way is to be using it through the arrangements of centralised establishments. The good news is that such can be avoided by strictly buying and holding, or selling your Bitcoin through a decentralised system and self-custory wallets. This is not a hard thing to do, you may Google them and you will be fetched with a lot of ideas and advice on how you can go about them.

As for those who are using the coin in a centralised way, well, I am one of them and you can't blame us for that. First, I have nothing to hide, second, the centralised system makes my Bitcoin management more dynamic. I can stake, trade, swap coins/tokens and do all kinds of business easily and cheaply with such an arrangement, which makes it better for me even as I also have some self-custody keeping, just to be safer.

This is a very good post and I am glad there is a person who wants to use bitcoin in a classic way.
The answer to your question is that it's getting hard every day to be your own bank and keep privacy when using Bitcoin.

The first step is to buy an air-gapped hardware wallet, like Coldcard and Passport, then create a Bitcoin address and save seed phrases safely. If you want to buy Bitcoin, you better use decentralized exchange to keep your privacy more likely protected. Always try to use kyc-free services. This way, you'll be your own bank and you'll protect your privacy.

By the way, there is a price that you'll have to take and that's responsibility. When you have a total control, you also have the whole responsibility on your shoulders!

I think I agree with your first paragraph. Bitcoin's value appreciates over time and many are just too comfortable with the fact that bitcoin can be profitable, nothing else matters.

Isn't running a bitcoin node time consuming? For someone who just wants to Be his own bank, can owning a non-custodial wallet alone serve same purpose?

Running a full node is great, but you can be your own bank without it. Running a full node gives you better privacy and security as you can verify everything locally, and you do not depend on third party nodes, it also means you are contributing to the security of the network. However, you can also run a pruned node, which would reduce the resources you have to spend.

You simply have to avoid custodial services to be your own bank, and also use self custodial wallets and p2p exchanges. That way you always have your own seed phrase and in total control of your funds.

People who're using Bitcoin in decentralized way are privacy oriented or value security over money, so they won't shift to centralized way. It just new people who interested with Bitcoin tend to choose centralized way since they lack of knowledge or they're money oriented person.

Nope, the idea of Bitcoin will still grow, no matter how strict is the regulation, there's always a way to get rid from centralization, check kycnot.me there are many no KYC sites.

The op poses a valid and relevant question. Bitcoin is meant to be used in a decentralized way, but of course people have the freedom to turn to centralized solutions as well. Some use them because of lack of knowledge about noncustodial wallets. Others are interested in Bitcoin as an investment asset, so they don't really care about the ideas behind it. Also, there are those using exchanges or custodial wallets out of convenience, especially if they make a lot of transactions regularly.

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


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

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

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

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

Reasons:
 
Newbies
flexible trading access
Cost saving.

Still maximum number of Bitcoins are stored in their custody.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To understand why people do this, you need to understand The Anon Paradox (https://medium.com/@stephen-r-thomas/the-anon-paradox-anonymity-big-small-1231a6a060e4) which says that people want anonymity for "small" money and personal identity for "big" money.

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

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

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

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

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

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

In the future, pure centralized digital currencies like Haypenny (https://haypenny.net) currencies will become more popular than blockchain because they offer the product that consumers actually want.

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Where is your ledger?

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

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

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

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

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

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

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

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

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

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

Bitcoin bank; centralized bank to store your bitcoins.

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

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

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

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

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

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

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