Why do people store their cryptocurrency on exchanges?

[MiliMil]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

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[pooya87]

why people store their digital assets on crypto exchanges.

It depends.
Some newbies who never bothered educating themselves about cryptocurrencies and bitcoin do it because they think that is the way to store them! For a very long time I saw people who thought blockchain.info is like PayPal and is the "owner" or "creator" of bitcoin so you have to only use that site if you wanted to use bitcoin!!!
Others who are short term traders do it because they know that altcoins pump and dump nature requires them very quick access to their shitcoins so that they can dump them in an instant instead of having to make a deposit and in some cases having to wait for thousands of confirmation before their account is funded and they are allowed to dump them.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

It depends on what happens to Binance after the hack. If people all go away, specially if after the hack another "good CEX" comes along and takes all their customers away, they could go under and won't be able to pay their users.
After all that is what Binance did to the previous exchange that got hacked when they took all their customers away and pushed them under.

[Apocollapse]

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

If you think you're 100% safe after you hold your coins on hardware wallet, you're wrong. This because you're need to use an online software to integrate with your hardware wallet, this mean if your computer already get infected by virus and you're not aware with that, your hardware wallet could be compromised especially if you write the private key or seed phrase on your computer.

Hardware wallet isn't a perfect storage to combat any virus, but it's 99% way better than holding in exchange or online wallet.

[uneng]

People store their coins in exchanges because they pay interest over customers' funds. Between storing crypto in offline wallets and earning no passive income and storing online and earning passive income, some people prefer to choose the second option. However, due to the presented issues crypto investors are facing nowadays with exchanges services, it's really not a good idea to keep money in the exchanges. The risks are too high and there are no protection from authorities to customers, in bankruptcy or scam hypothesis. If at least authorities guaranteed protection to investors, it wouldn't be too risky to let funds at online platforms.

[elevates]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

What made you think that Ledger Nano is safe? There have been tons of incidents wherein it has got hacked. Ledger has never accepted that it has got hacked and has always blamed users. The only way you can safeguard your crypto is by keeping a little bit of what you have everywhere. That will help you a lot as you will not lose everything you have in one go.

[MiliMil]

What made you think that Ledger Nano is safe? There have been tons of incidents wherein it has got hacked. Ledger has never accepted that it has got hacked and has always blamed users. The only way you can safeguard your crypto is by keeping a little bit of what you have everywhere. That will help you a lot as you will not lose everything you have in one go.

I will be purchasing around 3 BTC in the next few days. I plan to keep it all in my hard wallet.
I have zero chance of getting hacked since my wallet isn't connected to the internet and is completely offline.

[Asiska02]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

The majority of people who fall victim to this scenario are those who were too lazy to ask how to save their coins in storage wallets. Some simply enter the world of bitcoin because it is trending and they want to profit from it without taking the time to sit and learn the do's and don'ts of the entire process.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

You'll also believe me when I say that a large number of people are aware of the risks associated with storing funds in exchanges and knows they’re susceptible to hacking and total lost of funds but continue to do so. You can't blame them because the majority of them have a reason. However, even if it is necessary to keep some of your coin in those exchanges, it is always advisable to keep a small portion of it there.

[Pandji02]

I think those who do that just don't think about it too much. Most likely they don't think about the stuff in their life too much and just flow in the river of life, but that's just my assumption, I'm used to thinking about everything I do.

[rodskee]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

I'm not sure if there are many of us still use exchange to store our funds because it has been long ago that this is being tackled that there are no safer place about our money in exchange as they are prone to hacking or even inside job money taking.

try not to fool ourself from this and better to use offline wallets like what you are going to purchase , ledger Nano .

[Queentoshi]

There are various reasons why people still store their cryptocurrency on exchanges even with the many warnings that have been given, and I am not just making reference to newbies but also some old crypto users, maybe on this forum or not. But one reason I have noticed is Procrastination. Procrastination in the sense that they have heard about the warning about not keeping your cryptocurrency on exchanges, they have planned to install or buy a wallet, and move their cryptocurrency away from the exchange they are using, they make all this plans, but they never do it because they keep procrastinating.

[Jatiluhung]

the reasons everyone still keeps their crypto assets on exchanges will vary widely.
and these reasons certainly have a diverse rationale. like some because they are really beginners and don't even know about the risks they take when they leave their assets on the exchange.
and of course there are those who only keep part of their assets on the Exchange. the reason is because they trade it every day (a day trader). and there are also reasons because they only have small assets so they don't have to bother transferring them to their personal wallet.

and i think a beginner who come with a lot of money (rich) and he will start to invest in crypto and bitcoin. and he will invest heavily. so I think the beginner will definitely first explore a safe way to store his investment assets.
there's no way he's going to deposit a lot of money and buy a lot of bitcoins on the exchange and leave it be. I think for now even beginners already know where they have to store their assets to be safe. but most of them still keep some of their crypto assets on the exchange because they really continue to trade them or indeed the amount is really, really small.

[Golfler]

Is the hardware wallet also likely to be stolen, damaged, or infected with a virus? I think it is better to store it separately and store it in multiple wallets.

[m2017]

It seems to me that it is easier for people to store their crypto on exchanges, because it is easier. I'll explain now. They are accustomed to using banks and depositing their money, and they shift all security and safety concerns to the bank. So users will relieve themselves of responsibility, which is fraught with huge risks. Storage on cold wallets requires some knowledge (which is quite affordable) and actions (which are also doable), but beginners don't want to delve into it out of laziness or irresponsibility.

So you have decided to seriously approach the storage of your crypto and buy a hardware wallet. That's the right decision. So you will be calm about your funds and reduce the risk of losses, as if you were storing it on the stock exchange. Commendable.

[LogitechMouse]

Why do people store their cryptocurrency on exchanges?

People have different reasons as to why they are preferring to store their cryptos on exchanges.

The only reason that I know is so that they can just sell their cryptos on the exchanges as early as possible if in case something good happens that might cause the coin that they are holding to pump immediately. I mean transferring coins from one address to another address takes time and that "time" might affect the amount of profits that they might have thus, they choose to risk it all and let it store on the exchange.

Maybe another reason why they are storing it on exchanges is the fact that they can earn a small percentage of that coin annually. Binance have this "Earn" feature where holders can earn a certain percentage annually.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

We don't know. Cryptocurrency isn't regulated so its CZ who will decide whether he will reimburse his customers if the worst thing happens or not.
Centralized exchanges are very prone to hacks and with what happened to FTX, for sure the trust of investors towards CEX declined. On the other hand, I believe that Binance will not get hack or at least lose their funds or run away (at least not in the next 3 years ).

[bittraffic]

So much trust in CEX. Binance was once hacked and they refunded the affected users.
Majority I suppose are traders that's why coins are on exchanges. It's easy to buy and sell when it's all there in the exchange while that market fluctuates, you wouldn't go to go deposit and withdraw every time the market shifts. I do this but for a few coins only, Binance has a mobile app, easy to access. If you are to keep your coins for a long term, a hardware wallet would be fine.

[boldandbrave]

Depending on each person, maybe they will only hold it for a short time or maybe they haven't found the right offline wallet. Btw, I had a bad experience when using ledger wallet. About 3 years ago I bought it to store some coins and hold it for a long time. so I didn't access the wallet for over a year. And when i wanted to transfer my coins i found that my ledger wallet LCD screen was showing nothing only a blue screen which required me to buy a replacement screen.

[Nrcewker]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

The reason for which people store their digital assets on crypto exchange is that they need it to trade and make money. Out of 90% people store their cryptos for this purpose only. Rest 10% if they storing their funds, they do it because either their funds are very less or they aren’t able to afford these wallets like Ledger etc. I know there are many risks when you store your coins on exchanges, but to be honest for most of the people these are only the options as they don’t know how to use electreum or they aren’t able to afford ledger.

[xSkylarx]

There are several reasons for this, including the fact that they are still using it to purchase another coin or that they are waiting for a good price to sell it and then convert it to their own fiat currency. This is the main reason I keep my cryptocurrency on exchanges: I need to wait for the right time to sell it, then transfer it to my own wallet. I'm not sure how long others keep it, but if something happens in exchange, they'll lose their coins as well. 

[Rikafip]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

Some to get measly return via staking, some simply due ignorance, thinking that exchanges are sort of banks and that they funds are "safu", some are simply too afraid to hold their own coins and would rather put that responsibility in someone else's hands. Neither of these reasons make any sense, but that's people.



 

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

Since their "safu" fund is allegedly 1 billion and Binance is in control of tens of billions of dollars, you can imagine what would happen and whether they would be able to reimburse everyone.

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

In the early days bitcoin attracted mostly people who were heavily into privacy, freedom, believed in "be your own bank" thing, but majority of bitcoiners nowadays don't really care about any of those things exepct numbers going up, so this example of yours doesn't surprise me one bit.

They store because they want higher exchange rates in future.

And how exactly you get "higher exchange rates" by storing your crypto on the exchange? Exchanges are for trading (exchanging) currencies, not for storing.

[Ayers]

So much trust in CEX. Binance was once hacked and they refunded the affected users.
Majority I suppose are traders that's why coins are on exchanges. It's easy to buy and sell when it's all there in the exchange while that market fluctuates, you wouldn't go to go deposit and withdraw every time the market shifts. I do this but for a few coins only, Binance has a mobile app, easy to access. If you are to keep your coins for a long term, a hardware wallet would be fine.

The same point of view, those who still store their coins on exchanges so far are probably traders, and traders make up the majority of this market rather than holders. For a trader, other than centralized exchanges, they have almost no other choice, it is considered a must whether they like it or not.

OP, storing assets on cold wallets or non-custodial wallets can only be considered much more secure than exchanges, but by no means absolutely secure. Therefore, you should not be subjective and negligent in preserving your cold wallet.

[bangjoe]

As many have said, why do people store their crypto on the exchange because it makes it easier to buy and sell assets easily and with other altcoins. Using an Offline Wallet, the average of them keeps it in the wallet because for long-term investments, usually, those who invest annually, while those who store their Crypto on the Exchange are usually scalpers or short-term investors who are looking for profit momentum from price fluctuations in coins certain assets.

If you talk about risk, it definitely has its own dangers among these actions, but it will be difficult for them as people who are also looking to take advantage of certain moments to increase their income if they are stored in an offline wallet. Not that it can't be done, but what I know is only a small part of altcoins are registered in the offline wallet.

[ethereumhunter]

People keep their coins on the exchange because they think that the coins can increase over a certain period, and if they move them to a personal wallet, they will definitely have to pay a transaction fee to send them back to the exchange. But nowadays, many private wallets have exchange features so people can directly sell them to other coins. And if you use Ledger Nano to store your coins, you've avoided the hacking risks that can occur on exchanges. But this may have something to do with the convenience they can get by keeping their coins on exchanges or in other wallets.

[ultrloa]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

If Binance will get hack and all of the funds successfully stolen by hackers with no chance of getting it back, well we can say that this will be the end of their business and another series of crying depositor which they cannot get back their money. Its just the same with FTX since for sure they cannot pay all of their depositor since that's a lot of money need to take care on.

Why people store their cryptocurrency in exchange? Some of them are to lazy to take out their money because they always think its better to do that since they will still go trade tomorrow or on next several months. And there are other who doesn't want to get deducted by fees.

[Tony116]

It is up to you, if you are a holder and store your assets on centralized exchanges like binance, it is a mistake, but if you are a trader, you will not have a choice.

If you hold your assets in a cold wallet, you will not be able to increase your assets or make a profit, but if you use exchanges, you can make a profit by trading and staking...In short, exchanges provide us with a lot of services to make a profit, which has attracted people and made it impossible for people to stop using them.

[TopTort777]

It is stupidity, greed and denial of facts. I know that people with small deposits keep their funds on exchange, because they dont want to spend those few bucks on transactions. They prefer to risk with everything just to save a bit. People tend to think that bad things will happen to everyone, but except them. There was and never be an exchange that wont scam, be hacked or all of a sudden freeze users account. It is just a matter of time. I dont know how many more exchanges must scam people, that will make them keep there funds they use for trading only.

[Questat]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

These are some reasons why it is discouraged to use exchanges wallet as a storage wallet but there are also some reasons why many people are doing this;
 * amount of coins stored
 * for trading purposes only ( it saves withdrawal/deposit fees)
 * hardware wallets are expensive ( we'd rather prioritize investing first)
 * safety is out of their mind

I'm using an online wallet anyways but after many years of using this, I've never encountered worse issues and never experienced losing my funds. Maybe because I was careful in handling my keys and password. If we are still careless, even using a hardware wallet couldn't protect your funds 100%.

[Broadanbig]

It depends on the person in question. I have friends that i was able to educate on  "not your keys, not your coin" after which  they saw sense in what i was telling them and they had no option in withdrawing their assets and funds from the CEX where they have them kept. When i asked them why they kept their assets on CEX one said it is the best convenient way for him as he is a trader so that he does not waste time transferring funds which would cost him some transaction charges and the others just have no tangible reasons of keeping their funds in CEX as they said it is safe with them saving their funds there which to them is very convenient. I had to give them instances and happenings around the crypto space so they could be updated as few of them are new bie in the system. That was how they immediately removed all their assets to a private wallet which they  have custody over.

[MiliMil]

The same point of view, those who still store their coins on exchanges so far are probably traders, and traders make up the majority of this market rather than holders. For a trader, other than centralized exchanges, they have almost no other choice, it is considered a must whether they like it or not.

OP, storing assets on cold wallets or non-custodial wallets can only be considered much more secure than exchanges, but by no means absolutely secure. Therefore, you should not be subjective and negligent in preserving your cold wallet.

Great point about traders. I didn't consider it from that perspective.

I plan to just keep my BTC offline on a cold wallet. I plan to hodl for at least 24 months anyway.

Has there ever been a hack of an offline cold wallet? I tried to look it up and don't think it has happened. Computers and laptops infected with malware is a different story.

[Kelvinid]

They have a valid reason I think why they keep using an exchange wallet. I don't think they are deaf not to hear or blind not to see that many exchanges closed and never give send back the money to the holders. We can expect their argument is strong and they will stand for it until they will realized and become a victim.

People keep their coins on the exchange because they think that the coins can increase over a certain period,
~

Many exchanges are promoting staking which encourage holders to keep their coins remain on the exchange than moving them safely to their offline wallets. Well, that sounds reasonable to them but for those who prioritize their safety over earning a few bucks and risking their coins, it was not really a good decision.  

[348Judah]

I believe forbthe sake of those that can't do without using a centralized exchange to jave this as part of the possible reasons why they uses them, first is because some don't know why they shouldn't or dont have a good understanding of a decentralized exchange from a centralized one, secondly some uses them in other to exchange their bitcoin into fiat for daily expenditures, therefore they will prefer having their assets in bitcoin than fiat and exchange it when the needed to, but this category of people don't store huge amount on CEX.

[fuguebtc]

They have a valid reason I think why they keep using an exchange wallet. I don't think they are deaf not to hear or blind not to see that many exchanges closed and never give send back the money to the holders. We can expect their argument is strong and they will stand for it until they will realized and become a victim.

People keep their coins on the exchange because they think that the coins can increase over a certain period,
~

Many exchanges are promoting staking which encourage holders to keep their coins remain on the exchange than moving them safely to their offline wallets. Well, that sounds reasonable to them but for those who prioritize their safety over earning a few bucks and risking their coins, it was not really a good decision.  

What about traders? Are you a trader? I wonder, if you made a profit by trading futures, where would you put your money to trade? I'm not a trader, but that's a question I get a lot from friends when I advise them to withdraw their assets from centralized exchanges.

Currently, in the market, not only us but also many large investors with capital from several million to tens of millions of USD still use the centralized exchange. I don't think the people who own that money are stupid enough to not know that leaving money on exchanges is very risky. Obviously they have their reasons.

[ProfWigSlipper]

I was surprised none of the first ten posts mentioned trading, Congrats post #11!

the reasons everyone still keeps their crypto assets on exchanges will vary widely.
and these reasons certainly have a diverse rationale. like some because they are really beginners and don't even know about the risks they take when they leave their assets on the exchange.
and of course there are those who only keep part of their assets on the Exchange. the reason is because they trade it every day (a day trader). and there are also reasons because they only have small assets so they don't have to bother transferring them to their personal wallet.

and i think a beginner who come with a lot of money (rich) and he will start to invest in crypto and bitcoin. and he will invest heavily. so I think the beginner will definitely first explore a safe way to store his investment assets.
there's no way he's going to deposit a lot of money and buy a lot of bitcoins on the exchange and leave it be. I think for now even beginners already know where they have to store their assets to be safe. but most of them still keep some of their crypto assets on the exchange because they really continue to trade them or indeed the amount is really, really small.

Trading is an extremely important answer, because you need orders sitting above and below the market to catch spikes and other big moves. Does anyone know of a good volume DEX (decentralized exchange) which lets you place limit orders?

Edit: Did a quick search, and it looks like it's time to stop procrastinating.  
"CowSwap, a decentralized exchange (DEX) aggregator, launched limit orders on Dec. 12..."

Edit #2: Cowswap looks interesting but the extreme - sometimes local to a single exchange - spikes will not be nearly as good. This deep into Crypto's existence, are active traders still stuck with CEX's?

[coinerer]

Many people find exchangers very trustworthy and store their funds there.  Many people keep their funds in the exchange for trading. Everyone stores their funds in exchangers for different purposes. So not everyone's purpose is same like I personally never use exchanger as a personal wallet use exchanger only for trading so in that case I have to keep some funds there. Because if I repeatedly withdraw my trading funds to personal wallet then I have to pay transaction free again and again.  So in that case I have to keep some funds in the exchanger

[Yatsan]

Reason is to trade it or sell it with convenience. I see no other reason than with investors just wanting to ease themselves than to access their wallets and transfer time to time. Also, we all know traffic occurs in networks which could result to missed opportunities of selling at peak. Another thing I guess is that those who do so simply trust exchangers, nothing more and nothing less. I am guilty of such thing to be honest. I was not aware that what happened with FTX is really possible because owners were negligent. But if such thing did not occur, for sure many people are still putting their assets on exchangers. Right now, people are not required to remove their funds from exchangers; it is not a good thing to generalize exchangers anyway.

[MiliMil]

It is stupidity, greed and denial of facts. I know that people with small deposits keep their funds on exchange, because they dont want to spend those few bucks on transactions. They prefer to risk with everything just to save a bit. People tend to think that bad things will happen to everyone, but except them. There was and never be an exchange that wont scam, be hacked or all of a sudden freeze users account. It is just a matter of time. I dont know how many more exchanges must scam people, that will make them keep there funds they use for trading only.

To be honest I've lost a lot of trust and respect for exchanges. Being hacked is one thing but misappropriating customer funds is disgraceful and Bankman-Fried deserves to go to prison for a long time. The guy was a 30 year old billionaire but still chose to be greedy and destroy the lives of a lot of people. If SBF was capable of that what's to say CZ or any other CEO can't do the same?

[SeeBiscuit]

The same reason they store massive amounts of coin on a hot wallet or extension wallet that has fucked up transaction signing permissions/approvals

[Ale88]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

First of all, the exchanges use cold wallets to keep the majority of their funds, so it's simply not possible that Binance (or other exchanges) can los the majority of their assets because of a hack, they're not that stupid. But to answer you question there are several reasons: people who don't even know what is a Ledger, people who do daily trading so they need the funds to be available all the time, simply lazy people and so on.

[Frankolala]

Sometimes laziness can also be a reason for people to keep their coins in an exchange, these lazy ones are the ones who knows that keeping their coins in an exchange is risky but because they don't want to learn or try how to setup a hardware wallet believing it is too complicated, so they decide to leave it in an exchange and having  fake trust on that exchange.

Greed can also cause it because if your coins is in an exchange, it is easy for you to trade,so they don't want to pay that little fee in which they will pay to transfer their coins from their personal wallet to exchange before trading. The interest added is just for you to allow them use your coins for different purposes.

[passwordnow]

You're doing the right thing by buying your hardware wallet and many of the members here got their hardware wallets, either Nano Ledger S or X or Trezor and its variants.
One reason those people store funds on exchanges is about being confident and convenient in keeping them there. That might be the major factor and reason why they're keeping it there for good as they think that exchanges like Binance and other popular ones are untouchable but little did they know, one must learn from FTX.

[crunck]

You're doing the right thing by buying your hardware wallet and many of the members here got their hardware wallets, either Nano Ledger S or X or Trezor and its variants.
One reason those people store funds on exchanges is about being confident and convenient in keeping them there. That might be the major factor and reason why they're keeping it there for good as they think that exchanges like Binance and other popular ones are untouchable but little did they know, one must learn from FTX.

FTX crash doesn't mean binance will crash too, like coinbase it's been around for 11+ years, and have you seen it crash? While it is not recommended to store large amounts of assets on centralized exchanges, it is impossible to stop using these exchanges. Please assure me that you and OP are not using binance for day trading. If not, please don't badmouth the exchanges.

[justdimin]

It is stupidity, greed and denial of facts. I know that people with small deposits keep their funds on exchange, because they dont want to spend those few bucks on transactions. They prefer to risk with everything just to save a bit. People tend to think that bad things will happen to everyone, but except them. There was and never be an exchange that wont scam, be hacked or all of a sudden freeze users account. It is just a matter of time. I dont know how many more exchanges must scam people, that will make them keep there funds they use for trading only.

You may consider it stupid, but looking at even the bitcoin developer at the top being able to get hacked, I would say nothing that you could do is safer than keeping it at Binance. I know many people would say "what if binance gets hacked" or something of sorts, or binance being a scam eventually and what not, or even bankrupting, but I think those are smaller chance than me not getting hacked.

I feel like if I store it myself, eventually someone could hack into me, I do not trust myself, whereas Binance is strong and at the top and never failed to provide withdrawal to customers ever. Hence, it is easier to make sure that your money is safe with them.

[serjent05]

It is quite easy to answer why people store their cryptocurrency in exchanges.

1.  They are lazy.
2.  They have limited knowledge of securing their fund.
3.  They are actively trading
4.  They had avail for earning through staking and lending programs.
5.  They wanted to save withdrawal processing and deposit transaction fee.
6.  They have limited knowledge on setting up their own wallet and too afraid to move their coins thinking that they can possibly misclick or input wrong address that may cause their funds to poof.

Pretty much that says the majority of the reason why people store their cryptocurrency in exchanges.

[lalabotax]

We cannot deny that many people still store their cryptocurrency on exchanges, both centralized and decentralized exchanges. There are several things that might be the reason:
- They are still using it to carry out trading activities, or they are stopping trading but still want to continue trading at some point in the future, and require a sizable fee to transfer.
- They don't save for the long term but for the short term where at any time the price of a coin rises, they can take profits
- They don't want to spend money on hard wallets yet
- They don't know about this yet
Even though storing in exchanges has a fairly high risk.

[Russlenat]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

Maybe because their lack of knowledge and ignorance makes them trust the centralized exchanges more than their own wallet. Or they think that as long as centralized exchanges are not hacked, they will continue to remain reliable and reputable which I think only ignorant people believed on that. Or they are just illiterate that they are force to trust centralized exchanges because they don’t have choice too.

[|MINER|]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges..

First of all I would like to say that there are two types of crypto exchanges one is centralized exchanges and the other is decentralized exchanges. What you mentioned here means I can assume you are talking about using Centralize Exchange.
It's true that a big one like FTX whose incident has instilled fear in everyone about centralized exchangers.
However, I think the main reason people store their funds here is the trading and low trading fees, especially when a trader is actively trading while using other hardware wallets or offline, the trading fees are higher.  Moreover, other options are also available in centralized exchangers.  But for long-term holding, smart traders use offline.

[philipma1957]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

Some to get measly return via staking, some simply due ignorance, thinking that exchanges are sort of banks and that they funds are "safu", some are simply too afraid to hold their own coins and would rather put that responsibility in someone else's hands. Neither of these reasons make any sense, but that's people.



 

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

Since their "safu" fund is allegedly 1 billion and Binance is in control of tens of billions of dollars, you can imagine what would happen and whether they would be able to reimburse everyone.

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

In the early days bitcoin attracted mostly people who were heavily into privacy, freedom, believed in "be your own bank" thing, but majority of bitcoiners nowadays don't really care about any of those things exepct numbers going up, so this example of yours doesn't surprise me one bit.

They store because they want higher exchange rates in future.

And how exactly you get "higher exchange rates" by storing your crypto on the exchange? Exchanges are for trading (exchanging) currencies, not for storing.

Okay put 100000 Doge you own on an exchange.

Set 3 sale points

33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents

set it and forget it.


doge was 0.2 cents in 2020

doge peaked at 70 cents in 2021

So the above is doable.

or was possible to do.

At the moment I have Zil on an exchange it is from merge mining etc and zil

I sell all the etc and list the zil at 10 cents 20 cents and 30 cents.

[Rikafip]

Okay put 100000 Doge you own on an exchange.

Set 3 sale points

33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents

set it and forget it.

How much Doge would you have now if you did that on FTX?  

I know some people that are doing exactly that on Binance, and they are not newbies or anything of that sort. Unlike 99% of the people, they fully understand the risk so if Binance goes down they won't blame CZ/US government/whoever but instead only themselves.

[arabspaceship123]

It's convenient storing on exchanges. It isn't safe I won't do it. The alternative's to download blockchains for every crypto you're saving.

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

[BitcoinPanther]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

Some to get measly return via staking, some simply due ignorance, thinking that exchanges are sort of banks and that they funds are "safu", some are simply too afraid to hold their own coins and would rather put that responsibility in someone else's hands. Neither of these reasons make any sense, but that's people.



 

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

Since their "safu" fund is allegedly 1 billion and Binance is in control of tens of billions of dollars, you can imagine what would happen and whether they would be able to reimburse everyone.

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

In the early days bitcoin attracted mostly people who were heavily into privacy, freedom, believed in "be your own bank" thing, but majority of bitcoiners nowadays don't really care about any of those things exepct numbers going up, so this example of yours doesn't surprise me one bit.

They store because they want higher exchange rates in future.

And how exactly you get "higher exchange rates" by storing your crypto on the exchange? Exchanges are for trading (exchanging) currencies, not for storing.

Okay put 100000 Doge you own on an exchange.

Set 3 sale points

33,333 at 29 cents
33,333 at 49 cents
33,333 at 69 cents

set it and forget it.


doge was 0.2 cents in 2020

doge peaked at 70 cents in 2021

So the above is doable.

or was possible to do.

At the moment I have Zil on an exchange it is from merge mining etc and zil

I sell all the etc and list the zil at 10 cents 20 cents and 30 cents.

I also do this kind of strategy.  Putting my cryptocurrency on sell order and leaving it until the order is fulfilled.  It is already doable because we had done successful trade using this strategy.  But still, I is not advisable to leave all our funds in an exchange.  We do this because we can afford these coins during the time of order placement since the price of the coins is too cheap and we are hoping that it will moon and fill our sell order.

[sheenshane]

It is quite easy to answer why people store their cryptocurrency in exchanges.

1.  They are lazy.
2.  They have limited knowledge of securing their fund.
3.  They are actively trading
4.  They had avail for earning through staking and lending programs.
5.  They wanted to save withdrawal processing and deposit transaction fee.
6.  They have limited knowledge on setting up their own wallet and too afraid to move their coins thinking that they can possibly misclick or input wrong address that may cause their funds to poof.

Pretty much that says the majority of the reason why people store their cryptocurrency in exchanges.

I tend to agree with what you've all said except the number 1.
No one becomes lazy when it comes to valuable stuff, because that's your asset and if you'll know that it'll be lost in the future, then you have to save it.
That category will belong to the lack of knowledge, they store on exchange because they thought that it's safe and there's always support to ask when every time they'll forget or lose their credentials to access the account, unlike non-custodial wallet or exchange it's all your responsibility to keep your private key.

Another factor could be, that Binance promised their users that their fund was in SAFU, but poor users only believed in the marketing strategy so that they will not leave on exchange put into a trust.  People have learned now, that FTX and Binance recently happened was have an impact on the community on how to store your coin in a right place.

[goldkingcoiner]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

I do not think that most people truly understand the spirit and motivation behind cryptocurrency, especially Bitcoin. Its about taking away the power that others have over our money and our life by decentralization, trust-less payments and making your money your own responsibility.

But for some people, this responsibility is too much so they would rather outsource it. Whether for convenience or just because they do not trust themselves with holding on to their own money, people still run to the exchanges and hand over all their money.

Its a lazy and sad excuse but at some point, when their money is taken away from them, they will understand the spirit of crypto. Then perhaps they will become true hodlers.

Suffice it to say, we need to push decentralization and decentralized tech much much harder. People are definitely starting to wake up.

[n0ne]

Not everyone keep their holdings on centralized exchanges. Most of the users who keep cryptocurrency on centralized exchanges were the users with small amount of holdings. These people involve into trading activities as well as spend directly. The convenience is the prime factor that makes them make use of centralized exchanges for all cryptocurrency associated needs.

[glendall]

the reason I keep my funds/assets on the stock exchange is because for me it makes it easier to transact when the market is supporting when the market is up/down (right time to sell and buy), but the shadow of losing is definitely there and always makes me anxious when there is news of a stock exchange hacking
with yesterday's incident I withdrew my main assets to my personal wallet and understand how sensitive the exchange is, because not only can hacking lose money but exchange failure can also make our funds disappear without clarity

[landheer]

everyone's mindset is different, and of course everyone has different goals, and also everyone's courage is different. and most people who put assets on the stock exchange are mostly beginners who of course don't know the risks of putting assets on the stock exchange, and it could also be because they usually trade short-term, or indeed the assets on the exchange are few so they won't be afraid to lose assets.

[Bazzu]

people who keep their crypto on exchanges maybe because they don't know the dangers of storing crypto or assets on exchanges. and they don't know about it
purse. and I also have previous experience of always putting crypto on exchanges, but after joining this forum I came to know how dangerous it is to keep crypto on exchanges. or usually people who store their crypto on exchanges because they believe the exchange they choose is trusted. so they are not afraid to put their assets on the exchange.

[Darker45]

Luke's case is possibly a targeted attack. Others say the man is rather complacent in his setup. Still others say that Luke was a man, however technically knowledgeable he is, and he committed a mistake in securing vital information.

Whatever, the point is that it cannot be used as an argument to push for custodial services rather than self-custody. And it is utterly absurd and irresponsible for the likes of CZ of Binance to share the advice that people shouldn't manage their own keys because a Bitcoin OG messed up.

[Fivestar4everMVP]

For me, i think reasons why people store their bitcoin/cryptocurrencies on exchanges depends, for example -
\A Newbie - Some one who is new to cryptocurrencies practically and educationally does not know the importance of owning their own private wallet, and also because most of them usually usually start with a very little amount of money, they discover that even if they want to withdraw it to their non-custodial wallet, they cant because there balance is not even enough to cover the withdrawal fees from the exchange.
\A Day-Trader - Professional day traders probably would decide to leave their funds on the exchange since they know they are coming back in the next few hours to continue their trading activities, to them, it makes no sense taking their funds out of the exchange and coming back few hours to deposit it back again, this is not to mentions the fees involved in both transactions.

Though there might still be other reasons, like Laziness and others, i believe the two i mentioned are few of the major reasons why some people still leave their funds on the exchange.

[Davidvictorson]

why people store their digital assets on crypto exchanges.

I believe that the benefits often outweigh the risks for certain people. Some others do not just know how much they stand to lose should anything happen to the exchange. For me, the most important lesson for proponents of bitcoin in 2022 is that nothing is guaranteed and nothing is promised. Exchanges are vulnerable to hacking, and they can vanish in an instant, taking with them your money. It's also possible that people keep their digital assets on cryptocurrency exchanges since they just have a tiny number of them there and don't care what happens to the exchange.

[bitzizzix]

Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.

[MiliMil]

Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.

Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.

[laurenB7742]

Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.

Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.

The profit from the service on the exchanges is really small compared to the risks we will face. If they want to receive interest through staking on centralized exchanges, then I recommend that they deposit money in the bank, it will be safer because the interest rate is the same but the risk level of the bank will be smaller.
You are right, other than traders, we have no reason to put our money in CEX. We will still need CEX, CEX is still very important can't get rid of it entirely, but use them carefully and never trust them too much.

[headingnorth]

Learning how to use a hardware wallet seems technically daunting to some people. It's not that hard once you know how but even I will admit as a user of Ledger and Trezor wallets it is not so very simple to learn. Not that hard either but it does take some time and effort. There is definitely a learning curve. And some people just don't want to invest the money for a hardware wallet because it does cost a bit of money and certainly and investment of time to learn.


I would suggest a middle ground which is to use a good software wallet with a good history and reputation that gives you self-custody and gives you control of your private keys such as Trust Wallet, Mycelium, Exodus, Atom Wallet, etc. Coinbase also has a good self-custody wallet option. These are very simple to learn how to use.

I have never heard of any of these software wallets being hacked.

[Ayers]

The same point of view, those who still store their coins on exchanges so far are probably traders, and traders make up the majority of this market rather than holders. For a trader, other than centralized exchanges, they have almost no other choice, it is considered a must whether they like it or not.

OP, storing assets on cold wallets or non-custodial wallets can only be considered much more secure than exchanges, but by no means absolutely secure. Therefore, you should not be subjective and negligent in preserving your cold wallet.

Great point about traders. I didn't consider it from that perspective.

I plan to just keep my BTC offline on a cold wallet. I plan to hodl for at least 24 months anyway.

Has there ever been a hack of an offline cold wallet? I tried to look it up and don't think it has happened. Computers and laptops infected with malware is a different story.

After all, traders or not, centralized exchanges are very important to us, if we don't store assets on them, we use them daily. I guess you also buy bitcoin from a centralized exchange and then move to a cold wallet, and later if you want to sell bitcoin, the exchange is also what you need, so there is no need to hate it too much.

I also haven't heard of any cold wallet hacks kept entirely offline. But when using a cold wallet, in addition to protecting from hacker attacks, you should also pay attention to storing your seed phrase from problems in life such as loss, fire...

[gabbie2010]

I think exchange wallets have much better security than a hardware wallet. Accessing an exchange's wallet requires the entrant to go through a number of steps and security to access the wallet that is not seen in other hardware wallets.  To access the hardware wallet, an external software is required, if for some reason your device is infected with a virus or other technical problems occur in the device, but you will not be able to access your hardware wallet very easily.  That is why most investors or crypto currency holders consider it safer to keep their coins in exchange wallets.

So with all the stories of hacking of crypto exchanges with the recent FTX exchange hack you still believe that exchanges has better security than hardware wallet, I think you should reconsider your preference for exchange in keeping or storing your coin against hardware wallet, it has had been stated times without number that crypto hodlers should always ensure that their assets are safe in hardware wallets where you have access to your keys, despite all the efforts by exchanges to protect and secure their firewall they still remain vulnerable to hackers due to the increasing sophistication of hackers.

[Godday]

Crypto assets are indeed something that is always targeted by hackers, because of their fantastic value so that many people want to get bad and they don't care about the losses that others will experience, so wherever we store crypto assets always have risks and this must be prepared to deal with them, currently there are very many who store crypto assets on exchanges because they are easy to monitor every movement that occurs, and we know that all exchanges have a high level of security but in the event of a hack it is indeed our calamity that must be accepted and the exchanges will not be held responsible because they also experience the same thing as the users.

[passwordnow]

You're doing the right thing by buying your hardware wallet and many of the members here got their hardware wallets, either Nano Ledger S or X or Trezor and its variants.
One reason those people store funds on exchanges is about being confident and convenient in keeping them there. That might be the major factor and reason why they're keeping it there for good as they think that exchanges like Binance and other popular ones are untouchable but little did they know, one must learn from FTX.

FTX crash doesn't mean binance will crash too, like coinbase it's been around for 11+ years, and have you seen it crash? While it is not recommended to store large amounts of assets on centralized exchanges, it is impossible to stop using these exchanges. Please assure me that you and OP are not using binance for day trading. If not, please don't badmouth the exchanges.

It's not the point, the point is that every exchange has the possibility that can be FTX in no time. We don't know their whole situation all of this time and then they'll just come out at their lowest time.
Yeah, I may not have seen Coinbase crash but it's not the whole point of it. On this market, no exchange is too big not to fail and all of them has the same possibilities just as FTX and that's the point of what I'm saying and I can choose any exchange that I want but I'll not keep most of my funds there.

[Fullcoinese]

currently there are very many who store crypto assets on exchanges because they are easy to monitor every movement that occurs,

the reason is easy because they are beginners who know crypto from exchanges. they buy their Bitcoins and other assets on exchanges. I believe some of the newbies don't even know Crypto wallets.
not for the reason that it is easy to monitor the price if they are all professionals in trade or investment. I am sure they will not keep their assets on the exchange. wallets they control themselves will be more secure for assets.

[Oasisman]

Why do people store their cryptocurrency on exchanges?

Simple, It's either they don't have any idea about the danger of the exchange (not your keys, not your Btc)  or they are traders. Majority of the most experienced people in crypto who's storing crypto in an exchange are traders 100%. It is necessary for them to always have their assets ready for any price actions so they could trade it immediately once they see an opportunity. Time and timing is critical for traders.
Now, as for the newbies who find it more convenient to just store their Btcs to an exchange, maybe they have not experienced losing their asset due to an internal incidents happened with the exchanges. Like, hacking and system failures.
Well, most of the newbies don't have that much of an asset stored in an exchange anyway. Unlike the traders who are most likely having a massive amount stored in their account.
So, to answer this question, people store their crypto on an exchange simply because they are trading regularly.

[lizarder]

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

Currently 88% of bitcoins are outside the stock exchange, as explained by Ratimov in his post Re: Long-term Bitcoin accumulation continues People are starting to realize that valuable assets like bitcoin cannot be guaranteed when placed on an exchange, the case that happened to FTX has had a lot of impact on asset storage, so people are starting to pay attention to security behavior.

And one more thing, why is the right reason not to put Bitcoin on the exchange, because indeed the case that has happened to FTX is the fact that keeping bitcoin on the exchange is very unsafe. As explained by theymos in his post Reminder: do not keep your money in online accounts

[drwhobox]

Great decision, I don't keep my bitcoins on exchanges now though I only keep my coins in exchange while I trade them. But last year I don't trade any coins and kept them all out of the exchange.
I used to keep my coins on exchanges like your friends and other people, it is not like I don't know about wallets but I have significant trust on the exchange I trade. I know it sound foolish, but later I learn about all these exchange hacks and stuffs and now I don't keep my faith in exchange or I don't risk my coins.

Looking forward to know more about your experience with ledger nano.

[AicecreaME]

Too lazy enough to look for another place where they could store their coins much safer, or doesn't want to spend money to secure their coins, pretty ironic, isn't it. The other reason is that maybe they don't want to spend transfer fee vice versa if they are going to sell it just in case. People never learn until something happened to their coins. "Prevention is always better than cure".

[Minecache]

I think exchange wallets have much better security than a hardware wallet. Accessing an exchange's wallet requires the entrant to go through a number of steps and security to access the wallet that is not seen in other hardware wallets.  To access the hardware wallet, an external software is required, if for some reason your device is infected with a virus or other technical problems occur in the device, but you will not be able to access your hardware wallet very easily.  That is why most investors or crypto currency holders consider it safer to keep their coins in exchange wallets.

To be fair, both have pros and cons, and there's no such thing as absolute safety. But I disagree with your statement that leaving assets on an exchange is more secure than a hardware wallet. The exchange is a place where a lot of assets are concentrated, so it is always a target for hackers, so storing it on it is much riskier than cold wallets, not to mention other problems such as bankruptcy or frozen assets suddenly.

In short: there are certain risks when using cold wallets that require caution, but leaving funds on centralized exchanges is riskier because once our assets are stored there, we will no longer have full control over our assets.

[Yamifoud]

Too lazy enough to look for another place where they could store their coins much safer, or doesn't want to spend money to secure their coins, pretty ironic, isn't it. The other reason is that maybe they don't want to spend transfer fee vice versa if they are going to sell it just in case. People never learn until something happened to their coins. "Prevention is always better than cure".

And maybe because they never experience yet of being hacked and so they keep using this strategy. But for day traders, this is somewhat optional as they can save a few bucks from moving in and out. But if we are just normal investors who aim for long-term holding, even though we never gotten scammed or hacked yet, securing our funds should be at the top of our minds, and storing our money in exchanges wallets is not advisable anymore. In fact, hearing from others who lose their money from exchanges is already enough that we need to secure our coins before we become a victim too.

[Crypt0Gore]

Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.

Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.

Even as a crypto trader leaving your asset on a centralized exchange is not safe because in a matter of minutes, the exchange can do the unthinkable, with the way things are going people will be left with the option of sticking with decentralized platforms for trading, I believe few dex are now building real time trading like that of Huobi and Binance for example Gains Network. It's only a matter of time.

[S A KHAIR]

Given the level of vulnerability of exchanges, it is best to transfer most of your assets to a personal wallet, and leaving them on the exchange can make them vulnerable to the unexpected. However if you are an active arbitrage trader, the currencies you trade can be left on the exchange.
but it is better to leave the amount that you intend to use for short-term trading on the exchange and transfer the rest to the wallet, and not keep 100% on the exchange. Remember the adage "Not your keys, not your coins", this means if you don't control your private keys by transferring your coins to a wallet that you fully control.
and this is actually a serious problem that users, especially beginners, should be aware of, it does look trivial and may be considered safe because they never know and have the best knowledge, experience and information about this. And don't put all of their assets on the stock exchange to avoid unwanted things.

Other than trading, I see no reason why you would keep it on an exchange. Someone said the exchanges pay interest but that still wouldn't be enough for me to store it on an exchange.

Even as a crypto trader leaving your asset on a centralized exchange is not safe because in a matter of minutes, the exchange can do the unthinkable, with the way things are going people will be left with the option of sticking with decentralized platforms for trading, I believe few dex are now building real time trading like that of Huobi and Binance for example Gains Network. It's only a matter of time.

Nothing is entirely safe, man, but the point is they don't have a choice. A lot of DEXs are trying to grow and provide services like CEX, but they are having many difficulties, and I don't think that can be solved in the next few years. And when using a DEX, you also need to connect to a wallet and accept permissions, so there is no guarantee that the DEX is secure.

[serjent05]

It is quite easy to answer why people store their cryptocurrency in exchanges.

1.  They are lazy.
2.  They have limited knowledge of securing their fund.
3.  They are actively trading
4.  They had avail for earning through staking and lending programs.
5.  They wanted to save withdrawal processing and deposit transaction fee.
6.  They have limited knowledge on setting up their own wallet and too afraid to move their coins thinking that they can possibly misclick or input wrong address that may cause their funds to poof.

Pretty much that says the majority of the reason why people store their cryptocurrency in exchanges.

I tend to agree with what you've all said except the number 1.
No one becomes lazy when it comes to valuable stuff, because that's your asset and if you'll know that it'll be lost in the future, then you have to save it.
That category will belong to the lack of knowledge, they store on exchange because they thought that it's safe and there's always support to ask when every time they'll forget or lose their credentials to access the account, unlike non-custodial wallet or exchange it's all your responsibility to keep your private key.

Another factor could be, that Binance promised their users that their fund was in SAFU, but poor users only believed in the marketing strategy so that they will not leave on exchange put into a trust.  People have learned now, that FTX and Binance recently happened was have an impact on the community on how to store your coin in a right place.

There are people who become lazy, maybe because of too much confidence in the centralized exchange.  I am one of those lazy people but not because I am too confident about the exchange, but because I am just lazy.  I am lazy to do all the process of withdrawal, especially if I have to setup up a wallet.  It isn't about lack of knowledge but the pure definition of being lazy itself.  And I had paid a huge price for this, I lost a hundred of thousands of DOGE in exchange, I missed their notification of closure due to me not checking my email regularly.    I happened to read the notice a month after the asset withdrawal process expires.

[Erumo]

It is simple - because people trust cryptocurrency exchanges. That is same as why people store their money in banks. Banks can go bankrupt all of a sudden also, but people keep storing their money there. Btw, for most crypto users, exchanges = banks. People are used to hold their not in cash under the pillow, but in some institutions. Similar crypto users prefer to keep funds "in a big company's account", instead of keeping them on their PC or device.

[Sanitough]

So much trust in CEX. Binance was once hacked and they refunded the affected users.
Majority I suppose are traders that's why coins are on exchanges. It's easy to buy and sell when it's all there in the exchange while that market fluctuates, you wouldn't go to go deposit and withdraw every time the market shifts. I do this but for a few coins only, Binance has a mobile app, easy to access. If you are to keep your coins for a long term, a hardware wallet would be fine.

Also, it gives more convenience on you knowing you don’t have to put to yourself  the whole responsibility of keeping it safe because the exchanges will do it for you. Although exchanges are not completely safe, but they can be trusted somehow with small amount of coins that you plan to trade when the market is already on positive shape.

[Rana590]

So much trust in CEX. Binance was once hacked and they refunded the affected users.
Majority I suppose are traders that's why coins are on exchanges. It's easy to buy and sell when it's all there in the exchange while that market fluctuates, you wouldn't go to go deposit and withdraw every time the market shifts. I do this but for a few coins only, Binance has a mobile app, easy to access. If you are to keep your coins for a long term, a hardware wallet would be fine.

Also, it gives more convenience on you knowing you don’t have to put to yourself  the whole responsibility of keeping it safe because the exchanges will do it for you. Although exchanges are not completely safe, but they can be trusted somehow with small amount of coins that you plan to trade when the market is already on positive shape.

I think there a very few people who store their valuable assets on exchange only for keeping safe. There are a lot of ways and wallet to store assets safely. Most of the people store on exchanges for getting benefits from exchange. They can trade, stake, reinvest an others activities to get profited from their capital.

[AmoreJaz]

So much trust in CEX. Binance was once hacked and they refunded the affected users.
Majority I suppose are traders that's why coins are on exchanges. It's easy to buy and sell when it's all there in the exchange while that market fluctuates, you wouldn't go to go deposit and withdraw every time the market shifts. I do this but for a few coins only, Binance has a mobile app, easy to access. If you are to keep your coins for a long term, a hardware wallet would be fine.

Also, it gives more convenience on you knowing you don’t have to put to yourself  the whole responsibility of keeping it safe because the exchanges will do it for you. Although exchanges are not completely safe, but they can be trusted somehow with small amount of coins that you plan to trade when the market is already on positive shape.

I think there a very few people who store their valuable assets on exchange only for keeping safe. There are a lot of ways and wallet to store assets safely. Most of the people store on exchanges for getting benefits from exchange. They can trade, stake, reinvest an others activities to get profited from their capital.

the dilemma comes when there is unexpected event happening on the exchange, like hacking. and your assets are in staking or earning interest mode. lucky if you are using binance because they have insurance, however for other exchanges, you have no assurance of getting back your assets. some are just plainly trading and for them, it is a hassle if they will send their funds back and forth to their wallet, hence, leaving some on the exchanges. but in any case, if you think you won't be using your coins for long, better send it to your own wallet.

[Viscore]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

There are still some reputable exchanges that have stood the test of time, but that doesn’t mean that they can be forever reliable of our coins. But I guess people have been blinded by the promises of these centralized exchanges that they even trusted them with all of their coins. And others may also have no choice but to put their coins on the exchanges since they have no real knowledge and skills on holding them for long term in their own hardware wallet. And admit it, people have this mentality to just never want to exert more effort on their own, but only want to stay stress free even if it means trusting the exchanges for long term may mean losing their coins in the end.

[royalfestus]

Another reason many put their coins into centralised exchanges is to place order of coin for selling in the bull market and for buying in the bear market, which most decentralised exchanges can't without users availability. Most bitcoin wallets are non custodial, so the coin is not safe and any compromise by wallet developer can lose fund. Centralised exchanges can be accessed anywhere without ones device, whereas other form of trade use applications store of personal device to access their portfolio and trade

[BitcoinPanther]

There are still some reputable exchanges that have stood the test of time, but that doesn’t mean that they can be forever reliable of our coins. But I guess people have been blinded by the promises of these centralized exchanges that they even trusted them with all of their coins. And others may also have no choice but to put their coins on the exchanges since they have no real knowledge and skills on holding them for long term in their own hardware wallet. And admit it, people have this mentality to just never want to exert more effort on their own, but only want to stay stress free even if it means trusting the exchanges for long term may mean losing their coins in the end.

True exchanges today offer lots of services such as staking, hedge funding, lending where if a customer avail can give him a passive income.  We cannot deny that the offer is very attractive and rather than leaving  our coins idle in our wallet, many tends to take advantage of the offer even though they know there is risk involved in their action.  Just look at the Binance exchange, they offer services where we can earn profit, Binance exchange being reputable, gain people's trust so these people will not hesitate to send their coins to the Binance exchange and avail for their "profitable" services.

[Leviathan.007]

I can't give a reason of why people are sometimes holding their assets and bitcoin on exchanges because I've never done that, I personally usually won't use any centralized exchange even if the exchange is very famous and even after depositing bitcoins there I would withdraw my founds after doing the exchanges instantly instead of holding there.
But I guess most people will hold their assets on changes because they want their bitcoin and cryptocurrencies to be ready for doing any trade sometimes they will place an oper order for sale and their assets won't form the exchanges, the other reason can be the profit usually the exchanges offer for holding the assets there for long term.

[Patrol69]

I think people may hold their digital currencies in wallets of different exchanges to ensure safety. I think exchange wallets are relatively safe compared to other hardware wallets. No one would want their accumulated wealth to be unsafe. People may deposit their digital currencies in exchange wallets due to greater security and convenience.  Because if any currency can be kept in the exchange wallet, then those digital currencies can be converted in different ways at any time, but there is no such facility in the hardware wallet. Therefore, thinking about security and convenience, people may deposit their digital currencies in the wallets of various exchanges.

[wastagnn]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

People store cryptocurrencies on cryptocurrency exchanges where they can be traded and bought and sold easily. They don't really have the knowledge and skills to keep them in their wallets for long periods of time. It is also possible to profit when the currency price rises in the exchange. It is also possible to earn profits through staking and lending.

[Hyphen(-)]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

If Binance got hacked today, the news will be every where and would be worse than that of FTX and other exchanges hack due to how people are using Binance.

Despite FTX, LUNA and other exchanges hack that lead to the long bear market, people are still keeping their coins in Binance which means people have good trust in Binance despite not being right to keep our coins in exchanges but people are still doing it , i don't think they will stop. 

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

Sometimes most people think it is difficult to use offline wallet because they lack good knowledge about the wallet, and some beginners are exposed to exchanges like Binance as a start for easy access to Bitcoin or crypto trading.

Some lack knowledge about privacy and did not know about the risk involved in keeping coin in exchange that's why they prefer exchange for easy access.

[WatChe]

There can be multiple reasons for this strategy. If I talk about myself then I have to rely on some exchnage to convert my crypto into fiat. Since crypto is totally illegal in my country and anyone caught in this business will go to jail.
One other main reason for keeping crypto in exchnage is people who do day trading, it only possible if you have account in some exchnage. I do agree that crypto on centralized exchnage is not yours, "not your keys, not your coins."   

[Ziskinberg]

I think people may hold their digital currencies in wallets of different exchanges to ensure safety. I think exchange wallets are relatively safe compared to other hardware wallets. No one would want their accumulated wealth to be unsafe. People may deposit their digital currencies in exchange wallets due to greater security and convenience.  Because if any currency can be kept in the exchange wallet, then those digital currencies can be converted in different ways at any time, but there is no such facility in the hardware wallet. Therefore, thinking about security and convenience, people may deposit their digital currencies in the wallets of various exchanges.

I will say no... Putting our money into an exchange wallet is risky. Even though it was spread to different exchanges, it is still the same situation and you will lose your money instantly if deposit to scam exchanges. I don't know where you get the idea that it was safe than using a hardware wallet because if you only see what happens to FTX and many other exchanges that ended scams where a lot of holders/investors had lost their money, it surely will open your mind.

Have you heard that someone loses their money by using a hardware wallet?

[Erumo]

Coz people are afraid to take responsibility. They are afraid to fail, in case they lose they cryptocurrency. But, if they store cryptocurrency on a exchange and something happens to it, then its exchanges problem, exchange has failed, but that person is a victim, that accidentally store his funds there. People always prefer to blame others, then themselves.

[wiss19]

They won't just store it for no reason. They are likely a trader, p2p seller or a merchant inside the exchange, they can also do it for staking purposes, and many more reasons. That is if they are an experienced person here in crypto but for someone who is still a newbie, they can think that popular exchanges such as binance are very trusted so they use it for solely storing their funds instead of some crypto wallets. On your question if what if binance got hacked tomorrow?

I think that was a big disaster not only to those who keep their money inside it but also for the crypto market as a whole but I heard binance offers some reimbursement. Not only sure though if there are specific requirement for this.

[Raflesia]

For people who prioritize investing, especially for the long term, saving money on the stock exchange is clearly a bit of a question, but as for traders, I think the reason is not far from them doing that for their trading.
Regardless of anything, actually something like this is not wrong, but indeed we cannot fully believe in it, especially with the several incidents that have occurred recently.

[Outhue]

Some crypto exchanges have good staking rewards compared to direct staking from the project's platform, also people intentionally keep their assets on crypto exchanges for trading and a few other businesses like peer2peer business, that's why some people became a victim of fund losses when an exchange gets hacked.

[Blawpaw]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

I guess that is not only a matter of storing coins on exchanges. People will send their coins on to exchanges as they want to sell their coins as soon as there is a spike. At least many people I know does this. Other may store their coins on exchanges as they ate not clear aboit not your keys not your coins....

[GideonGono]

Maybe they are just saving their time and fee for sending it when they need to convert it into Fiat, or maybe they don't really have other wallet than their trading sites.
Some of my relatives who also tried crypto only have exchange wallets they don't really have ledger or other wallet before I introduce it to them (Online Wallet like MEW).

[RealMalatesta]

Coz people are afraid to take responsibility. They are afraid to fail, in case they lose they cryptocurrency. But, if they store cryptocurrency on a exchange and something happens to it, then its exchanges problem, exchange has failed, but that person is a victim, that accidentally store his funds there. People always prefer to blame others, then themselves.

And not for nothing neither. Taking responsibility in crypto world means that you are literally responsible for all of your own money. It's like storing at a safe in your house, people will want to steal it if they know where it is. Whereas if you store it in a bank, how could they steal it? That is the most important difference.

I keep all my money in few web wallets (this doesn't mean that I am against non-web wallets), I trust them more than I trust myself, but more importantly, if I stored it in my pc for example, that means hackers would want to have a crack at it, and I do not want to get hacked, even if they can't hack the money, they would bother me and why would I want to accept that as my future? It's better to let it be in safer place than my PC.

[Mate2237]

It was your topic that attracted me to this thread. Let me not beat around the bush, but straight to the point. People are storing their coins in exchange because of the transaction fees and also for easy sell off at anytime they want. If you want to sell off your coins in a very short period of time, and you send it to your non custodian wallet which you will definitely pay a fee and later sooner you send it back to the exchange for sale which you will still pay another transaction fees again why can't you just keep it in the exchange and sell it off in any time soon.

[freedomgo]

I can't give a reason of why people are sometimes holding their assets and bitcoin on exchanges because I've never done that, I personally usually won't use any centralized exchange even if the exchange is very famous and even after depositing bitcoins there I would withdraw my founds after doing the exchanges instantly instead of holding there.
But I guess most people will hold their assets on changes because they want their bitcoin and cryptocurrencies to be ready for doing any trade sometimes they will place an oper order for sale and their assets won't form the exchanges, the other reason can be the profit usually the exchanges offer for holding the assets there for long term.

That is mostly the case for some traders who still trust centralized exchanges because they want to easily trade their coins in the exchanges when the market is in bullish trend. But it would be more safe if those traders would only place minimal amount of coins to trade using exchanges as we don’t hold any outcome guarantees like it will be profitably done or not. And hacking could be very possible anytime in all exchanges operating online.

[molsewid]

I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.

These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.

What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?

I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.

The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.

Will give my thoughts on the Ledger Nano once I receive it.

Simple because some other want to sell their asset immediately once the market recover it will not get charge. They will believe that if they will rise and keep it. will be very harmful and sad. Also, the fee of device fee cannot ixecute maigi yung kasal. I rwammy don't know how but I knew the right person in many. bookls are real. It is really it is just gives celebratei in every issue.

[batang_bitcoin]

Easy access.
It's like that you'll just have to log in and boom, you can see your balance and if you want to trade, then trade it with other cryptocurrencies and have its value currently with a stable coin. That's how quick it is and that's why those that have huge fund are keeping it no matter what warning people have been telling them, they trust the exchange no matter what happens. It will be hard to convince them if they're the ones that understands the situation and yet, no action done.

[Falconer]

Easy access.
It's like that you'll just have to log in and boom, you can see your balance and if you want to trade, then trade it with other cryptocurrencies and have its value currently with a stable coin. That's how quick it is and that's why those that have huge fund are keeping it no matter what warning people have been telling them, they trust the exchange no matter what happens. It will be hard to convince them if they're the ones that understands the situation and yet, no action done.

Maybe this reason is true, because I also tend to think that some of funds stored in exchange, especially stablecoin, will make it easier for me to buy and accumulate bitcoin. Of course it wasn't much, but only in the amount one could afford to lose too.

But for whatever reason, I believe depositing funds on an exchange is an option that is never really recommended even if the exchange has a good reputation. I wouldn't do it in the long term, but for my needs in the short term it's still a possibility for me to consider. In the long term, all funds must be moved to a secure wallet where only we have control and custody of the assets we own. Just that.

[Lanatsa]

Easy access.
It's like that you'll just have to log in and boom, you can see your balance and if you want to trade, then trade it with other cryptocurrencies and have its value currently with a stable coin. That's how quick it is and that's why those that have huge fund are keeping it no matter what warning people have been telling them, they trust the exchange no matter what happens. It will be hard to convince them if they're the ones that understands the situation and yet, no action done.

Maybe this reason is true, because I also tend to think that some of funds stored in exchange, especially stablecoin, will make it easier for me to buy and accumulate bitcoin. Of course it wasn't much, but only in the amount one could afford to lose too.

But for whatever reason, I believe depositing funds on an exchange is an option that is never really recommended even if the exchange has a good reputation. I wouldn't do it in the long term, but for my needs in the short term it's still a possibility for me to consider. In the long term, all funds must be moved to a secure wallet where only we have control and custody of the assets we own. Just that.

Its one of the reasons too which im really guilty with this where i do need to store up some USDT came out from my crypto sell or conversion earlier for me to directly purchase or buy coins whenever i do see some

opportunities which it is really just not hassle and could directly possibly able to get in into those kind of chances which it doesnt really come often, since we are really that afraid on missing out those opportunity

then you would really be finding that storing your stablecoins on exchangers would be the key or something that could really save you up from the hassle which
is mostly the case on why people are really that a fan on using up these platforms.

[tjtonmoy]

Everything on the internet in vulnerable and if you can't keep your crypto safe then you should not own it in the first place. That's where newbies make the mistakes. They just go on and buys it and then after someday those assets of there is gone. And things about exchanges that it is like necessary evil. It is harmful, but you steel need them for certain task like trading or p2p selling, fiat converting etc.
But keeping your assets always on your exchange wallet is a bad habit. Newbies should always avoid this.

[KennyR]

Everything on the internet in vulnerable and if you can't keep your crypto safe then you should not own it in the first place. That's where newbies make the mistakes. They just go on and buys it and then after someday those assets of there is gone. And things about exchanges that it is like necessary evil. It is harmful, but you steel need them for certain task like trading or p2p selling, fiat converting etc.
But keeping your assets always on your exchange wallet is a bad habit. Newbies should always avoid this.

Agreed, we need to understand the risks associated with the internet connection. We're connected to the world. Anything could happen with our digital belongings. Most of the time people just leave the funds on exchanges not by purpose, but by situation. They just do trading and leave it for the access for ease of trading if there is supportive market situation. Transferring between wallets will cost as well as takes time for confirmation.