Newbie Reminder: Treat Exchanges as Marketplaces

[Pandu Geddon]

Putting assets on an exchange is very risky. what happened to FTX certainly teaches us a lesson. we have no control over our assets. everything is owned by a third party. so it's better now we get used to storing assets in our wallets. if can't have a hardware wallet, an online wallet like Trustwallet is fine for a while too.

SafePal S1 etc.

The safepal S1 hardware wallet is also not used to store our assets there. the hardware used will direct us to the online wallet on the smartphone to access it. not much different from Trustwallet. the hardware is only used as a validator when making outgoing transactions. so it will be safer when we put our assets there.

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[lovesmayfamilis]

Great comparison; it would be great to explain to beginners all the other points in such a simple way. But people have a short memory, and very quickly the drama that happened with FTX will go down in history. In the next topic, we saw agitation for the storage of funds on the exchange and a strong belief that the exchanges are obliged to return losses. This suggests that no matter how simple the language we try to use to explain the dangers of holding funds on exchanges, there will always be people who read vertically.

[Crypt0Gore]

It's over for CeFi.

I hope newbies and trader will start believing DeFi more after all the shady mismanagement of funds that FTX got itself into, this is never going to be erased from crypto history ever.

Now FTX scandal is going to join the likes of Bitconnect, Onecoin and Luna.

[Pmalek]

Example of a cold wallet Is Electrum wallet

Electrum is not synonymous for cold wallet, but the software can be used both as a cold or a hot storage solution. It's never a cold wallet if used on an everyday computer that is connected to the internet. But it works on an airgapped and cleanly formatted system that can't connect to the internet any longer. 

I also believe that the current events with exchanges will be a lesson and same way sound a warning to everyone using centralized exchanges to take oft their life earnings and assets off from them in other not to be a victim just as in the case of FTX.

FTX wasn't the first exchange that created major drama for its users and it will certainly not be the last one. People didn't learn before, and I don't think they will learn now. There are plenty of folks going: I am so glad I kept my coins on KuCoin, Binance, etc., and not on FTX. And that's the problem. If it doesn't affect them personally, they don't consider it too big of an issue and see no reason to change their behavior. 

these are some example of complete cold hardware wallets; Ledger Nano X. Trezor One. SafePal S1 etc.

Some don't consider hardware wallets as cold wallets. Then again, they don't consider them as hot wallets either. They are somewhere in the middle. Unless airgapped, they rely on an internet connection for normal functioning, but some are equipped with chips that provide a safe enclosure for your keys and sensitive information.     

[MainIbem]

Absolutely correct.
Most time its only when i want to sell to local currency i would deposit or whenever the market seems to be waving, i might immediately deposit to sell to a stablecoin in other to save my investment from losing value this is because i don't tend to hold for long terms after which i withdraw back to storing wallet. Those who had it in mind to hold for long term should go for cold wallet where they have full control of their assets.

[LoyceV]

Dear newbies, please treat exchanges, such as Binance, KuCoin, Kraken, Huobi, OKX, and Coinbase, as marketplaces.

That also means you should select the exchange with lowest withdrawal rates. Check that before using them!
See for instance WithdrawalFees.com.

Some exchanges (Binance for instance) try to trick you into withdrawing FAKE Bitcoins (on their own made-up (centralized) chain). They now have about 5 different withdrawal options, while only one of them is Bitcoin. DO NOT fall for this, or you won't have the keys to your Bitcoins.

[Zilon]

Day traders can't really afford to move their funds to their wallet everyday but its possible to follow by other kind of traders.

Yeah it's a challenge for daily traders. I had suggested before that it will be better to split them into two or more exchanges depending on on the traders fund. At least its rare to have all exchanges having issues at the same time. Then monthly some of the funds can be moved to wallets. This could minimise the risk.

Just like we warn investors about risking what the can afford to lose the same goes to day traders on centralised exchanges leaving the amount that is worth losing on a single exchange. Day trading has never given passive income since it's origin so why risk so heavily, it is of no use waiting to move funds monthly it can be done as soon as a certain target is achieved or at the end of every trade depending on the account size.

[SquirrelJulietGarden]

Just like we warn investors about risking what the can afford to lose the same goes to day traders on centralised exchanges leaving the amount that is worth losing on a single exchange.

Very few people can absorb advice, warning and practice good preventive activities. They usually skip warnings and try to learn from their experience but unfortunately learning cost by themselves is not small.

Day trading has never given passive income since it's origin so why risk so heavily, it is of no use waiting to move funds monthly it can be done as soon as a certain target is achieved or at the end of every trade depending on the account size.

Storing your coin on centralized exchanges too long is very bad and FTX is an example. If you trade daily, you have to store your coins on exchanges and it is a beginning of nightmare.

People are more favorite to use centralized exchanges than decentralized exchanges because they want to have higher trading volume, less margin of price changes (don't like high slippage on decentralized exchanges), lower trading fees (don't have to spend fee for each trading transactions by swaps). At the end, they take high risk with centralized exchanges.

Last but not least, trading daily is very difficult to get profit.

[Welsh]

Advantage of having your BTC in a cold wallet
1. You have total control over your funds
2. It can't be stolen or hacked

Example of a cold wallet Is Electrum wallet

Electrum can be used as a cold wallet, however by default or the most common usage it's not. If you ran Electrum in a offline environment, it would be considered cold storage, but even then you have to handle the downloading of Electrum, and the transfer to a offline computer, very carefully.

Also, it could technically still be stolen or compromised. There's always a physical threat, and it entirely depends on how you've secured it. Plus, there's no such thing as absolute security, there's always going to be flaws whether that's through the user or the software itself. You can only reasonably secure something, since you aren't going to know all the flaws until they're discovered, and there's been many in the past.

Some don't consider hardware wallets as cold wallets. Then again, they don't consider them as hot wallets either. They are somewhere in the middle. Unless airgapped, they rely on an internet connection for normal functioning, but some are equipped with chips that provide a safe enclosure for your keys and sensitive information.     

Technically, they aren't cold wallets. They're pretty much more secure hot wallets in my opinion. Even then, hardware wallets are usually susceptible to some nifty physical attacks. So, again they aren't absolutely secure. However, they're probably my recommendation to new users that new their wallet to be connected to the internet.

[Alisha-k]

A good discription and explanation on how exchanges should be treated. There is no business keeping coins that are not meant for trading on exchanges. Hackers are on the hunt and many more Centralized exchange are on the pipeline to getting hacked. we can't trust a system where their database is controlled from a central point and can stop their customers from making withdrawals. Buy from exchanges and move them immediately to cold wallets where worries of compromise is reduced to its minimal.

[salad daging]

Putting assets on an exchange is very risky. what happened to FTX certainly teaches us a lesson. we have no control over our assets. everything is owned by a third party. so it's better now we get used to storing assets in our wallets. if can't have a hardware wallet, an online wallet like Trustwallet is fine for a while too.

Trustwallet or Coinomi as a wallet that can be multicoin compared to storing assets on this exchange is more risky after seeing the impact of FTX which has become a new trend due to failure which eventually led to bankruptcy.
In fact, we are planning a long term investment, so just buy this hardware wallet, you have to sacrifice a little money to buy the wallet. For me, this is important and even if you don't want it, the wallet mentioned above is still worth it as long as your private key is responsible for yourself and not can store arbitrarily.
I myself believe more in hardware wallets and Electrum being a bitcoin wallet that is comfortable to use.

[_BlackStar]

Electrum can be used as a cold wallet, however by default or the most common usage it's not. If you ran Electrum in a offline environment, it would be considered cold storage, but even then you have to handle the downloading of Electrum, and the transfer to a offline computer, very carefully.

Also, it could technically still be stolen or compromised. There's always a physical threat, and it entirely depends on how you've secured it. Plus, there's no such thing as absolute security, there's always going to be flaws whether that's through the user or the software itself. You can only reasonably secure something, since you aren't going to know all the flaws until they're discovered, and there's been many in the past.

I like this kind of security practice with electrum, but let's be honest that if we have more than $10K in funds then it would be better to consider hardware wallets as a better security option.

Although in the end every bitcoin user is responsible for fund and himself, but as a community, we will probably advise them in the right and simple way. A hardware wallet would be very cheap compared to the risk of losing all the assets on the exchange, this is certainly a worthwhile thought.

[ThemePen]

That is the good suggestion ever. Like we see what the FTX done. And after some days there can be more exchanges so this is a good suggestion that keep out you all assets from all exchanges and don't store them in any exchange.

Exchanges can scam anytime like FTX. So be careful.

[Frankolala]

Leaving your funds in exchange means you are giving them access to do whatever they want with your funds. Newbies should take note of this in other for you to learn better in this community, a word is enough for a wise. If you can't sleep in the market place them why will you live your asset in the market place.

This is how scam issues are been discussed here and the best advice on how to be safe is given here but some persons will find it difficult to listen on simple safety tips on their investment and will finally regret their ignorance. Your electrum wallet is your coins, FTX hack is not the first and will not be the last save all your coins in your custody not in the hands of centralized system.

[uchegod-21]

Dear newbies, please treat exchanges, such as Binance, KuCoin, Kraken, Huobi, OKX, and Coinbase, as marketplaces. What do I mean? Just as you do not leave your goods on the market after you have paid for them, you take them home with you. Consider your coins as the goods you bought at the marketplace. Your bitcoins should only be stored in cold storage wallets after purchase, and transferred out when you want to sell them. It takes less than 10 minutes. Remember, if you don't have the keys, it's not your coins.

Good example. But in the market there is consumer buyers who buy in one's and go home with the goods. How about larger buyers who buyer in bulk and resell. They buy so large that they cannot take their goods home every evening and return them every morning. They don't have any other options than to build shops inside the market where they save the goods they buy and resell to people.
So, you don't blame them when their is fire outbreak in the market which will eventually burn down their goods

[Issa56]

Dear newbies, please treat exchanges, such as Binance, KuCoin, Kraken, Huobi, OKX, and Coinbase, as marketplaces. What do I mean? Just as you do not leave your goods on the market after you have paid for them, you take them home with you. Consider your coins as the goods you bought at the marketplace.

Most people think exchange is their house and not a market, they believe is a place where your funds can be secure, but they don't know its kind of risky leaving coins on exchange, some people always say they prefer leaving coins on exchange because it can easily be traded whenever they want and they don't have to be transferring coins from wallet to exchange, some people always say they prefer leaving their coin exchange because they can easily reset their passwords even if they forget it, but if private key is lost, then you won't be able to access your funds again.
But I noticed that most of those people giving reasons why they prefer leaving coin on exchange have not experienced any crypto hack before, they won't have being giving all those reasons, most of them have not lost money in any exchange hack before. Immediately after buying a coin we should always make sure we transfer it to our non custodial wallet address to have rest of mind, no exchange is to big to be hacked or compromised, we all have to be very careful.

[Peanutswar]

Your bitcoins should only be stored in cold storage wallets after purchase, and transferred out when you want to sell them. It takes less than 10 minutes. Remember, if you don't have the keys, it's not your coins.

Additionally with these you can buy trusted cold wallets with the Trezor and Ledger

Code:

https://www.ledger.com/
https://trezor.io/

And also check the supported coin because in different storage only limited support with the coin you want to, also for their trusted resellers world wide you can check here

Code:

[1]https://trezor.io/resellers
[2]https://www.ledger.com/reseller

I'm not partnered or a reseller just shares this information for the benefit of the newbies. Also if you don't have a budget yet ideal to use a hot wallet such as the following.

Code:

https://electrum.org/#home
https://www.exodus.com/

[Wakate]

Dear newbies, please treat exchanges, such as Binance, KuCoin, Kraken, Huobi, OKX, and Coinbase, as marketplaces. What do I mean? Just as you do not leave your goods on the market after you have paid for them, you take them home with you. Consider your coins as the goods you bought at the marketplace. Your bitcoins should only be stored in cold storage wallets after purchase, and transferred out when you want to sell them. It takes less than 10 minutes. Remember, if you don't have the keys, it's not your coins.

This is an important update for everyone it just newbies might not really understand what this means. Some persons do find it easy to keep coins on an exchange due to so many reasons which include easy to sell, Less swapping fee, staking, mining and some many others. It is obviously not advised for us to keep our coin on an exchange but sometimes we are always tempted to do that when we can bear the risk if anything happens to our coin. Some exchanges just careless and do not care about what we might lose if their platform get sticker or hacked.

[Razmirraz]

OP is this post only about Bitcoin? Well in my own opinion it shouldn't come to think of it many Newbies but more altcoins that bitcoin.

I think so, Op has mentioned Bitcoin specifically on the topic.
The exchange is not completely a safe place to store assets, we only have a password to enter the exchange but do not have a key to keep it safe. Op made this topic because there are several exchanges that have been successfully hacked, exchange hacks have occurred many times which makes our assets not completely safe there.

[Asiska02]

Dear newbies, please treat exchanges, such as Binance, KuCoin, Kraken, Huobi, OKX, and Coinbase, as marketplaces. What do I mean? Just as you do not leave your goods on the market after you have paid for them, you take them home with you. Consider your coins as the goods you bought at the marketplace. Your bitcoins should only be stored in cold storage wallets after purchase, and transferred out when you want to sell them. It takes less than 10 minutes. Remember, if you don't have the keys, it's not your coins.

This statement is as brief, clear, and direct as it should be. The information being conveyed here is simple enough for even the most laypeople to understand. Even if after all of this, someone from this forum still becomes a victim, their negligence is to blame and there is no other explanation or justification for it. NOT YOUR KEYS, NOT YOUR COINS.