Why do people store their cryptocurrency on exchanges?

[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.

[1714761899]

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[1714761899]

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[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.