are crypto owners naturally paranoid?

[Welsh]

We're paranoid enough to not trust banks, though I think there's more than enough evidence out there throughout history that indicates trusting banks is one of the fundamental flaws of modern day society. So, you could call us paranoid or enlightened, whatever takes your fancy. Though, I'd say anyone who takes responsibility for their own assets, and doesn't give someone else permission to manage them is smart, not paranoid.

If you have $100 in Bitcoin or crypto, it's OK to leave it in an exchange, but as you get more and more and learn the meaning of "not your keys..." you start to take more security measures, and that has nothing to do with being paranoid, but rather with being smart.

I wouldn't quite put it like that I'd say; depositing onto an exchange for a prolonged time (prolonged defined by more than it requires for you to immediately withdraw into fiat etc) is a bit like gambling, don't do it for unless you are prepared to lose it. Although, there's a major difference to gambling, and that's there's no real upside to storing on an exchange, whereas in gambling at least you could potentially benefit.

[Dewi Aries]

Paranoid is normal, it is better than get hacked and lose your money in every way we can get stolen. Mine get hacked once, but it is purely my mistake which i think my friend don't have problem with safety and i give him my private key and some of my exchanges id. And then his email got hacked and unfortunately all files is saved in his google cloud. Want to angry but can't because he get hacked too. For now i am saving my private key into harddrives and keep it by myself.

[krusepig]

Thanks for the replies, it's very interesting, and I look forward to experimenting with the ledger nano X.

I know the online exchanges keep the private keys in "cold storage"-- so it comes down to can the average person keep the private keys safer than the professional corporations with huge amount of resources? In addition if there is a security breach, it seems like there would be a better chance of you coming out whole if your funds were on an exchange.

I have a large stock/mutual fund portfolio stored with Fidelity/Vanguard and never think twice about it, I guess the logical question is what's the fidelity or vanguard equivalent in the crypto space..

[aoluain]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

I/m not paranoid of anything to do with my personal wallets, the ones I have full
control of. I have the right precautions in place to make sure my private keys are
accessable by me and my family.

As regards exchanges, they should be used as such and if done so there would be
no need to be paranoid.

If you feel paranoid then you either know there is a threat as in the case of storing
your crypto somewhere you have ot got 100% control or you dont have the proper
security measures in place for your wallets.

Make it right and be confident

[TheNineClub]

Regarding the 'naturally paranoid' statement, I think you are on the money with that one, but it boils down to most of the BTC users being brought up in the earlier stages of the internet where there was little to no regulation and we have learned to become more suspicious, paranoid and aware of the dangers that the internet brings.

[dothebeats]

Ahhh no. I'd rather lose my crypto funds due to my own fault than to let others do it, and have this feeling and expectation that they will reimburse me in the event that they got hacked or they mess up. Not your keys, not your coin. And not entrusting your coins to a third-party is not really being paranoid but rather just eliminating the possibility of letting others mess up your funds.

There are tons of cold storage options nowadays wherein the user doesn't have to be tech savvy at all. I'd rather get one of those than to let an exchange handle my funds for the long term. They can simply freeze my account and state some crazy things that I did not do and bam, I got my funds lost forever. One simple change on their ToS and I'm powerless over my own money.

[krusepig]

I guess for me I would much rather have $1000 bucks at bank of america than ten one hundred dollar bills at home in a dresser. Of course that's not a perfect analogy because the exchanges are not FDIC insured.

Perhaps in the future when crypto is more mainstream, crypto assets will be insured and backed by the banks and that will make cold wallets obsolete, or maybe I have no idea what I'm talking about.

Regarding the 'naturally paranoid' statement, I think you are on the money with that one, but it boils down to most of the BTC users being brought up in the earlier stages of the internet where there was little to no regulation and we have learned to become more suspicious, paranoid and aware of the dangers that the internet brings.

[Welsh]

I know the online exchanges keep the private keys in "cold storage"-- so it comes down to can the average person keep the private keys safer than the professional corporations with huge amount of resources? In addition if there is a security breach, it seems like there would be a better chance of you coming out whole if your funds were on an exchange.

Definitely, however the answer is for most people probably not. It requires discipline to actually secure your assets, but you could effectively make it 99% sure that your assets are safe with a offline wallet. Something which banks can't do. Banks have an issue with cyber attacks, as well as actual physical attacks, and being a public bank they actively broadcast they have a lot of money in their vaults.

As for exchange being breached, then history tells us that usually the customers are the ones to get hurt. You'll probably find it in their terms of service that they aren't responsible for any data or funds breaches. The fact is; the attack vector on banks, and exchanges are much larger than Billy Joe down the street who owns a couple of Bitcoin. Malicious users will always go for the biggest target, since they have more chance of actually coming out with something.

It's exactly why Microsoft Windows operating systems are targeted more by malicious code than Linux, though that changes when you get into servers. Though, most low level criminals are targeting the every day user, because it's the easy of the two.

I guess for me I would much rather have $1000 bucks at bank of america than ten one hundred dollar bills at home in a dresser. Of course that's not a perfect analogy because the exchanges are not FDIC insured.

Perhaps in the future when crypto is more mainstream, crypto assets will be insured and backed by the banks and that will make cold wallets obsolete, or maybe I have no idea what I'm talking about.

There's something entirely wrong with trusting a third party to manage your money. Banks actually actively use their customers funds to make more money as a business. How else would they be able to offer interest? This can, and has gone wrong in the past. However, yeah the government has set up a system in most countries that they secure a certain amount of money in a bank. Though, they've only done this because they've acknowledged the risk in trusting someone else with your money. Plus, it's usually a small amount like 85k.

[hatshepsut93]

Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story).

You are less likely to get hacked than an exchanges. Exchanges are targets of cybercriminals who are ready to use the most expensive zero-day vulnerabilities, because they can profit tens or hundreds of millions from a hack. You are not a target, because they don't even know about you and it's not easy to hack a cold storage or hardware wallet.

But hacking is just one of the risks, exchanges can also pull an exit scam, or the government can seize their funds, there can be regulations designed to lock you out of your funds and so on. The risks of self-custody are clear and low, the risks of trusting a third party can't be fully calculated.

[sulendra12]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

Well, the only reason you shouldn't keep your money into exchanges wallet are not just solely from hacking. There are some other factors that people recommends to prevent using exchanges for storing money such as downtime(that you can't access the website on certain time), fixed fees from the exchanges and etc.

I would rather store my small amount of money on the wallet that I can fully access than relying on third party to store my money even you think they are "well-known" to the community. It feels weird to store your money on third party that could steal your money anytime!

[Lanatsa]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

Wouldn't agree on this one because when you do have that cold storage then it is really just normal for you to keep that HW on best as you can plus if ever that one breaks then you could still have an access if you do tend to import to other wallet.Why? as long you do have the Private key then you could
really always have that access.In HW you do only have that 2nd layer of security.

Unlike when you do store you coins on an exchange then once hacking incident happen then those coins are lost forever even just on having a simple
problem of scam on a certain platform and since you don't know the keys of the said wallet then you cant do anything much about it.

[TimeTeller]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

Well, the only reason you shouldn't keep your money into exchanges wallet are not just solely from hacking. There are some other factors that people recommends to prevent using exchanges for storing money such as downtime(that you can't access the website on certain time), fixed fees from the exchanges and etc.

I would rather store my small amount of money on the wallet that I can fully access than relying on third party to store my money even you think they are "well-known" to the community. It feels weird to store your money on third party that could steal your money anytime!

We have the same thoughts on this because if it is in your wallet, you have the full control.
But if it is in the exchange, what if suddenly there's maintenance going on, and you need to pull out your funds for emergency purposes, you can't.
But if in case, you will store a lil bit of your funds in exchange, better store it in exchange with insurance like binance.
Owners are paranoid in nature, whether they are holding big or small amount, as they worry about the security of their funds.

[qwertyup23]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

I think it applies to every person who has a significant large amount of investments at their current platforms and exchanges.

Given that cryptocurrencies has this reputation of their exchanges being scammed frequently, crypto owners are naturally paranoid when it comes to storing their coins in a specific wallet. For example, stocks have been regulated internationally by the Securities and Exchange Commissions, that is why you have confidence that your stocks will not be stolen. On the other hand, cryptocurrencies are somehow independent as the type of regulation they have are mere 'tolerance' when it comes to the perspective of the government.

[Oilacris]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

Well, the only reason you shouldn't keep your money into exchanges wallet are not just solely from hacking. There are some other factors that people recommends to prevent using exchanges for storing money such as downtime(that you can't access the website on certain time), fixed fees from the exchanges and etc.

I would rather store my small amount of money on the wallet that I can fully access than relying on third party to store my money even you think they are "well-known" to the community. It feels weird to store your money on third party that could steal your money anytime!

We have the same thoughts on this because if it is in your wallet, you have the full control.
But if it is in the exchange, what if suddenly there's maintenance going on, and you need to pull out your funds for emergency purposes, you can't.
But if in case, you will store a lil bit of your funds in exchange, better store it in exchange with insurance like binance.
Owners are paranoid in nature, whether they are holding big or small amount, as they worry about the security of their funds.

We are indeed seeing it as a hassle thing whenever you dont able to pull out your funds because it is stuck on an exchange which it is normal that you would really be worrying once you do have funds on a certain platform.

The good thing that you do own the key of a certain wallet is indeed you do have the full control and access to it without needing any
permission or something like that.

[Hypnosis00]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

Honestly, it was best to have full control of your crypto than to rely on the security of third parties like exchanges. A lot of hacking issues happening this time and these exchanges platforms are the main targets of these hackers and that one day you will get surprised that your account and your funds have been gone.

You can track those addresses where it sends but not the person who took this, that still hopeless to bring it back. And these exchanges won't give any shares of your losses and they might deny their responsibility.

[GeorgeJohn]

No comfortability towards bitcoin owner irrespective of the status of trust in any wallet, they most be small slight of paranoid reasoning mentality, i over heard people emphasising on ledger Nano as the the qualify institute of cryptocurrencies security perfect for securing coin, yes of course it's nice area to secure a coin but it can be hack also, can we ask ourselves this question, while people still lost their coin while their phrase is with them.

[virasog]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

I think you are a newbie and do not have complete knowledge of bitcoin and how crypto currency works. When you will get a bit experienced, you will totally change your statement. In crypto world, those who keep their money in the exchanges are actually paranoid. We need to keep our money in personal non-custodial wallets if we want complete control over our coins.

[Fortify]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

I think crypto owners have to be a little more paranoid than regular fiat currency bankers. Banks have had longer to refine their online services and optimize their security against many types of attacks. Plus the underlying banking system makes it much easier to track who actually ends up with the money and people generally don't allow their personal accounts to be abused as part of fraud. However exchanges are newer to the scene yet need to have banking grade security, they probably get hit harder by things like DDOS attacks because criminals think it will be easier to hide the funds and we've already seen a few cases where greedy owners/poor security caused exchanges to go down - so being careful with where you store your Bitcoin is very necessary.

[Ararbermas]

It seems to me that it would be safer (and more convenient) to keep your crypto on an exchange (coinbase, blockfi etc) than cold wallet. Wouldn't the odds be greater that you mess up your cold storage than a large exchange being hacked or whatever (even if they are hacked, that wouldn't necessarily mean you would lose any coins, whereas if you are hacked that's a different story). I ordered a ledger nano X but it seems that the exchanges are still the way to go based on probabilities. What are your thoughts?

really?  Have, you ever heard coinbase hacking issue? Seems not.. And you know what exchanges keep updating nowadays wherein you don't what will happen in the future.. For example binance, because of the intermediate update those who don't have kyc decided to dump to keep their money safe for another reason, such freezing account.. So probably its not safe to store especially for long time.. For me in my personal opinion i will preferred to used digital wallet that has 2FA authentication than exchanges because on that way i can assure my funds is safe..

[SFR10]

I ordered a ledger nano X

and I look forward to experimenting with the ledger nano X.

You should've done more research, prior to purchasing a hardware wallet from a questionable company: Ledger Nano X Battery Pandemic

In addition if there is a security breach, it seems like there would be a better chance of you coming out whole if your funds were on an exchange.

Looks can be deceiving ^{[unfortunately]}!

Perhaps in the future when crypto is more mainstream, crypto assets will be insured and backed by the banks and that will make cold wallets obsolete, or maybe I have no idea what I'm talking about.

That would never happen! You might want to refer to some of the risks other users described earlier ^{[e.g. freeze and etc...]} + most users, prefer to be a "crypto owner", as opposed to being just a "crypto user" ^{[the former requires you to have "full control" over your funds]}!