Storing your Crypto in Exchanges is better than using Cold Wallets!

[Get-Paid.com]

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.

[1713934104]

1713934104

[1713934104]

1713934104

[1713934104]

1713934104

[btc_angela]

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.

[Get-Paid.com]

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.

[logfiles]

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?

[Aveatrex]

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.

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.

Netscape was also a great success in its early days but around 2003 it almost disappeared and today almost no one is using it.

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..

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

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


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

[dunfida]

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. 

[Get-Paid.com]

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?

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.

[logfiles]

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 ... !

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
To this date there have been lawsuits after lawsuits

[Timelord2067]

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.

[Get-Paid.com]

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
To this date there have been lawsuits after lawsuits

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.

[roadrunnerjaiv2025]

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.

[tabas]

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.

[roadrunnerjaiv2025]

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.

[SeaBits]

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.

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.

[Wexnident]

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 ...

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.

If you forgot your password Ledger won’t make it easier for you. According to Ledger.com “After three incorrect PIN code entries, Ledger hardware wallets reset to factory settings, erasing the private keys from their secure storage.”
If you lose the device itself and it’s quite easy to lose such a small device - then you would have to order a new one, which is costly and could also take time for deliveries, so you would get stuck without your coins until then.
You still need to keep the main password (the seed) offline or online, in somewhere safe, and the same could be said in some way about an online wallet.

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.

[Kemarit]

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.

[Darker45]

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?

[crwth]

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.

[(o)(o)ilikeboobs(o)(o)]

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.

[Get-Paid.com]

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.