Why does Bitcoiner still support the use of centralized exchanges?

[Ale88]

there is this new scam going on with trust wallet where the seed phrase is gotten and all the available coins wiped out, hence no where is safe except you practice the right security measures.

Would you mind explaining this scam you're talking about? Scam from who? From Trust Wallet, hence Binance is scamming people? Or the scam has nothing do to with Binance? How do these people get the seed phrase? Do they trick the owner or can they just get it without any kind of real interaction? Just to understand if it's an app problem or just social engineering as usual.

It absolutely has nothing to do with binance or trust wallet and it's just the social engineering as usual and if I'm not wrong,these scammers have to guess the seed phrase of these accounts and anyone that is gotten correctly, it's been wiped mercilessly.

Then I'm sorry but I don't get your post: people scam other people with social engineering over everything, cryptocurrencies are just one of these things, so why did you make a post publicizing this "new scam going on with Trust Wallet" like it's something Trust Wallet related? Social engineering doesn't work with Ledger or other wallets? If someone is so naive to give away his seed phrase the problem is not the wallet but the person, no?

[blue Snow]

why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

The question is how do you know that?,

maybe not at all, some of them do not support centralized exchanges and always avoid the KYC.

But sometimes you won't get the hard life, In centralized exchanges you will get it easy, you can easily exchange your assets if the price starts to pump, and exchange also guarantees your asset is not lost if got hacked, Even if it's long and need a time (maybe over 10 years or never?)

[temple]

Come to talk of bitcoin peer to peer transaction, I believe a peer to peer transaction definitely would require two parties meeting to do transfer one on one which do not also guarantee ones safety of the account holder

You don't need to meet at all and the bitcoin being traded can be placed in escrow prior to the trade for safety. There are plenty of platforms such as Bisq and Robosats which have such a system in operation.

Although CEX are not  pseudo or anonymous and they demand for kyc before depositing with them but the peer to peer with the CEX are anonymous and ok to go with just as the DEX is.

Not correct. Trading peer to peer on a CEX is not in the least bit private or secure, since the CEX watches everything you do, reports it all to blockchain analysis companies, and has complete control over your bitcoin while the trade is taking place. You cannot trade peer to peer on a CEX - it is always peer to CEX to peer, with the CEX being a centralized third party. All CEXs which offer "peer to peer" are simply using the term as a marketing gimmick - it isn't actually peer to peer at all.

It is fascinating how you and some other Bitcointalk members relentlessly repeat the problems that come with the usage of CEXs. KYC, no KYC, privacy, no privacy, those aspects seem to be too superficial for some users to actually grasp the far-reaching consequences that the usage of CEXs can bring about later down the road. Tons of data is being collected and for most of those users the digital fingerprint is already perfect from the perspective of governments and other interest groups (hackers).

But my first thought often is that most people who think using CEXs is safe are often those who haven't burnt their fingers yet. I admit I have burnt my fingers and it helped me questioning my trading behavior far beyond what I initially thought is appropriate. Getting your funds frozen can be extremely distressing if the exchange literally blackmails you for an almost unlimited amount of proofs. I have had that in the past and I actually decided to let my funds go because I did at least take the precautionary measure in my mind to not deposit so much that I could be forced into providing whatever they ask me to provide.

I burnt my fingers twice. The above mentioned example was the second time. The first time the exchange just went offline. That is quite a couple of years ago but happened in the right time for me because that was when I was still experimenting. It was definitely hurtful because in relative terms I lost a lot of my crypto holdings.

As of today the funds I hold on a CEX is $0.00.

The saying 'don't risk what you can't afford to lose" applies not only to gambling, but also to keeping funds on a CEX. In essence, doing that can be very similar to gambling. I do understand some people who own so little that the transaction fees would be too much of a financial burden, but I think that trading makes even less sense in that situation. Rather try building a sufficient portfolio even if it takes time, but keep it off-exchange.

[o_e_l_e_o]

Your financial freedom with Bitcoin is still guarantee because the exchanges do not or can not have access to your wallet.

This isn't true at all. Once you send your coins to a centralized exchange, they have full control over them and you have no freedom whatsoever. You have absolutely no guarantee you will get your coins back and you have no guarantee that the centralized exchange will allow you to use them or spend them in the way that you want.

I think these exchanges have leveled up and wouldn't just vanish with users money

Have you not been paying attention to the news? FTX, BlockFi, Celsius, Voyager, 3AC, the list goes on. Literally dozens of exchanges in even just the last few months which have collapsed and taken all users' funds with them.

so why did you make a post publicizing this "new scam going on with Trust Wallet" like it's something Trust Wallet related?

There was a vulnerability in Trust wallet in which it generated key pairs and addresses in a insecure manner, allowing funds to be stolen. It wasn't via social engineering.

It is fascinating how you and some other Bitcointalk members relentlessly repeat the problems that come with the usage of CEXs. KYC, no KYC, privacy, no privacy, those aspects seem to be too superficial for some users to actually grasp the far-reaching consequences that the usage of CEXs can bring about later down the road.

People simply don't care until it affects them personally. We see small centralized exchanges collapse or scam all the time. But lots of people on here, Reddit, Twitter, etc., were sure that the likes of Celsius and Voyager were too big to fail and were perfectly safe, right before they lost everything. Then everyone was definitely sure that FTX was too big to fail, right before they lost everything. Now everyone is definitely sure (for real this time!) that Binance is too big to fail.

The same applies to your data. Everyone is happy to send all the documents needed to steal their identity off to literally any random internet stranger that can set up a website or copy the code for some shitcoin. Nobody cares until suddenly their identity is for sale on the dark net and they are now on the hook for $100,000 in debt someone else took out in their name.

[siniminomorocomunisakito]

In my view, the reason why Bitcoiners still use centralized exchanges can be explained by several factors. One of the main reasons is the convenience and accessibility that these exchanges offer. They make it easy to buy and sell Bitcoin for fiat currency and have a user-friendly interface. Moreover, centralized exchanges tend to have better liquidity, allowing for quicker trades at favorable prices compared to decentralized exchanges.

[BenCodie]

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Some reasons that I can think of to answer your question:
- Convenience - People like to instantly move to and from their bank account and would sacrifice their anonymity and privacy to be able to do so.
- Fear - Most tend to believe that by being private, they might be seen as doing something wrong.
- Ignorance or lack of knowledge - Whether it is by choice or not, people may not realize that privacy, anonymity, and decentralization are beneficial to them. Or, they simply do not know how to properly achieve it.

I suggested a Cybersecurity & Privacy board which would address these kinds of matters, which would help people to become aware and learn how to uphold the key principles of Bitcoin.

[Venik]

In my view, the reason why Bitcoiners still use centralized exchanges can be explained by several factors. One of the main reasons is the convenience and accessibility that these exchanges offer. They make it easy to buy and sell Bitcoin for fiat currency and have a user-friendly interface. Moreover, centralized exchanges tend to have better liquidity, allowing for quicker trades at favorable prices compared to decentralized exchanges.

That's true. Exchanges are mostly used by people who just want an easy way to invest in Bitcoin but don't care about anonymity, or just didn't do their research and not looking for a better way to store it. I always kept my Bitcoin in a non-custodial wallet, I'm using OWNR, but there are a lot of other options. A cold wallet is the best way to store Bitcoin, but IMO only if you have a lot of Bitcoin.

[Dzwaafu11]

Yes, bitcoin was initially created as a payment method that could work without a 3rd party. But nowadays, people are considering and using bitcoin as an investment, they are less concerned with the function and utility of bitcoin but only interested in profit and convenience for them. And CEX provides all the services that investors need in the most convenient way. 
Moreover, the market is not only bitcoin, but we also have altcoins, and if you want to invest, buy, sell, and trade altcoins, you must go with CEX. It can be said that it plays an important role in the market whether you use it or not because people still need it.

Actually, I agree with what you said about bitcoin being designed only for one purpose—transactions without a middleman. But thanks to modern technology and the ways in which new generations are embracing bitcoin locally, I believe that people use bitcoin as an investment because it is so secure and because there are so few jobs in their societies. Bitcoin is a way of life both now and in the past. I'm curious as to how someone may participate in the bitcoin market while refusing to use CEX, which we all know is crucial if we want to enjoy using bitcoin.
When some people, such as some wealthy people who use bitcoin today, hear about it from the other side as a wise investment, they may change their minds and carry on with their previously positive transactions after learning about another, less complicated method of transaction.

[Cookdata]

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

I don't think any serious Bitcoin enthusiast would endorse centralized exchanges. Decentralized Bitcoin exchanges existed prior to the dominance of centralized exchanges, and the primary reason for the latter's growth is their proficiency in marketing and promotions, as well as their ability to influence politicians and gain their favor to operate in a given country. Additionally, since the world is already entrenched in the banking system, many individuals prefer the ease of use of centralized exchanges. However, the drawbacks of centralized exchanges far outweigh any benefits they may offer.

Another reason why I think Centralized exchanges are everywhere is that the pseudonymous nature of Bitcoin makes it difficult for governments to regulate transactions,  they prefer centralized exchanges where they can quickly verify users' identities and transactions and freeze assets if necessary. Governments understand that they cannot control coins that are unidentifiable or untraceable, hence the need for centralized exchanges to silent decentralization.

[KiaKia]

Bitcoin has zero anonymity features, sorry mate, this digital asset is not a privacy coin like Monero or Dash, if you want to stay anonymous using Bitcoin you will need to use a mixer service. Your point is accurate and I use to ask myself why too, it's like people are using Bitcoin in the wrong way, no amount of Bitcoin should be deposited on any centralized exchanges from the first day of launch, but we can't control the people, we can only make them see reasons why Bitcoin was never built this way in the first place. Bitcoin is better running through DEX exchanges but we can't stop anyone from using centralized exchanges, all we can do is to warn them not to store their Bitcoin on any CEX.

[Abu-Naim]

In my view, the reason why Bitcoiners still use centralized exchanges can be explained by several factors. One of the main reasons is the convenience and accessibility that these exchanges offer. They make it easy to buy and sell Bitcoin for fiat currency and have a user-friendly interface. Moreover, centralized exchanges tend to have better liquidity, allowing for quicker trades at favorable prices compared to decentralized exchanges.

With the recent case of FTX is there any comfortability and reliability on centralized exchanges again?
As I go through the response from my senior members in the forum, I understand how risky it is to rely on centralized exchanges, and I understand that we can buy our Bitcoin from them and send them to our wallets not to leave the Bitcoin in there.

[Ale88]

so why did you make a post publicizing this "new scam going on with Trust Wallet" like it's something Trust Wallet related?

There was a vulnerability in Trust wallet in which it generated key pairs and addresses in a insecure manner, allowing funds to be stolen. It wasn't via social engineering.

I did a little research, are we talking about this?
According to an incident update shared by the company, the vulnerability only affected new wallet addresses generated by its browser extension between Nov. 14 and 23, 2022. The vulnerability could allow attackers to execute malicious code on the users’ devices and steal their funds.

It's a very limited case since it's related to a very short span of time and also linked to a browser extension, and it affected only new wallet, reading the previous comments I thought it was something that affected every single Trust Wallet user, which would have been way more dangerous.

Anyway I also read this:
Trust Wallet has assured its users that it will pay back eligible losses from hacks due to the vulnerability and has created a reimbursement process for the affected users.

This is the link to the source of the info I copy-pasted: https://www.binance.com/en-NG/feed/post/449497

So, as I see it, it's just a lot of unnecessary FUD, business as usual.

[Who is John Galt?]

In my view, the reason why Bitcoiners still use centralized exchanges can be explained by several factors. One of the main reasons is the convenience and accessibility that these exchanges offer. They make it easy to buy and sell Bitcoin for fiat currency and have a user-friendly interface. Moreover, centralized exchanges tend to have better liquidity, allowing for quicker trades at favorable prices compared to decentralized exchanges.

As o_e_l_e_o noted above, centralized exchanges pose huge risks in so many ways at once: while bitcoins are in their accounts, these coins are not in safe; as long as your data is held by any such organizations, it is not safe. Perhaps centralized exchanges provide a service that looks convenient and pleasant, but behind it lies the grin of a soulless organization that is not interested in the safety of users. I think that if bitcoin enthusiasts sometimes use centralized exchanges, it is unlikely that they use those require KYC. A centralized exchange in itself is not a good thing, but KYC is downright evil.

[pawanjain]

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

It's mostly because people have given more importance to the store of value and has completely ignored the main objectives of bitcoin.
People use it as an asset for trading and investments and the only place where it can be easily feasible is a centralized exchange.
This is the reason why many bitcoiners tend to encourage the use of centralized exchanges so that they can trade it and gain profits on it.

[ZAINmalik75]

However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

Earth is full of different types of people, some are tightly adhered to a centralized system which is there for many decades and some are loosely adhered to centralization so they understood the features of decentralization. Most people on earth use the internet and almost 70% to 80% of them are already using centralized platforms like this post will give you an idea. The Op has emerged with the same query that and related to yours so i hope it could benefit you.

You just asked the same query in an alternative way like why there is less adoption of decentralization and vast adoption of centralization. The answer still remains the same. for example, if you have a family business of a bakery, or of any cooking industry, and your elders are making dishes with some secret ingredients and you have adhered to use those ingredients so that the taste remains the same so that the consistent customers remain permanent customers.

Same way, governments, and authorities are like those elders who have made you to tightly hold the tradition of using the same ingredients and restrict you to think outside the box so that they can control you with no or fewer efforts. And that's what they are doing now, you must read this thread of Social media, now looking more for business than for socializing. which emphasizes the importance of a global village to control each and everything easily. As we can no doubt make transactions on the internet as a global village, but this global village also made it easy for authorities to control us and spectate us.

[Z-tight]

The community or you cannot force traders to do what you want. They just worry about money and profit, not about centralized or decentralized.

The word 'force' does not exist in the BTC community, it is a permissionless network and community, if you want to use it without learning from those who have more knowledge that you, then it is your choice and if you lose your BTC, it is your money that is lost. In a decentralized network there is freedom and not force, that's why real bitcoiners encourage people to use BTC in a decentralized way because centralized exchanges can confiscate your funds and force you to do whatever they want, or you will lose your money.

With the recent case of FTX is there any comfortability and reliability on centralized exchanges again?

Even before ftx collapsed they were not reliable, only when you have your keys should you be comfortable.

So, as I see it, it's just a lot of unnecessary FUD, business as usual.

It is always fud until they bite the dust, while all the information you got about this current case is correct, it does not make Trust wallet a recommended one to use, i would not recommend a wallet that's closed source and owned by Binance to people, we all know how Binance operates.

[Ale88]

So, as I see it, it's just a lot of unnecessary FUD, business as usual.

It is always fud until they bite the dust, while all the information you got about this current case is correct, it does not make Trust wallet a recommended one to use, i would not recommend a wallet that's closed source and owned by Binance to people, we all know how Binance operates.

I use Trust Wallet just to keep very small amounts of cryptos because I find it very easy to use on the smartphone, I don't use it for anything else, I use a cold wallet to store the other cryptos and I'd never recommend Trust Wallet to someone to be used as their main wallet. At the same time, as I said, I don't think that creating FUD about anything CEX related is somehow helpful for the community and for the people who are approaching this world for the first time. It would have been enough to say that there's been a bug in Trust Wallet, under very particular circumstances and for a very short period of time, that affected a minor number of people and that Binance itself refunded all the users who lost money (approx $170k, so probably what they made by the time I wrote this message ) instead of simply saying "There was a vulnerability in Trust wallet in which it generated key pairs and addresses in a insecure manner" because that message, in my opinion, that message was very general and left a lot space for different interpretations

[GideonGono]

I did some research on Bitcoin because I was interested in it, and I discovered that the key principles of Bitcoin are peer-to-peer, anonymity, pseudonymity, decentralization, and operating without a middleman to ensure that Bitcoiners can have financial freedom. However, despite knowing that Bitcoiners adhere to these tenets, why do some Bitcoiners act contrary to them? Why do they continue to support centralized exchanges, use them, and retain their Bitcoin there?

The only reason why I support or still keep on using centralized on Bitcoin or crypto is due to safely withdraw or convert my crypto into Fiat.
But if there would be other way for me to securely withdraw or convert crypto into Fiat without doing it in person then I would stop using centralized platforms.

[Z-tight]

The only reason why I support or still keep on using centralized on Bitcoin or crypto is due to safely withdraw or convert my crypto into Fiat. But if there would be other way for me to securely withdraw or convert crypto into Fiat without doing it in person then I would stop using centralized platforms.

If you said you use it because you can quickly withdraw your crypto to fiat, they you may be correct, but 'safely' doesn't depend on you at all, but the exchange you are using. You have to trust them to safely allow you withdraw, your security is not in your hands, and as you already know, you have no privacy when using them. Decentralized exchange like Bisq allows you withdraw securely and with your privacy still intact, it is a p2p exchange, so no third party involved. You can make other choices here too: https://kycnot.me/

At the same time, as I said, I don't think that creating FUD about anything CEX related is somehow helpful for the community and for the people who are approaching this world for the first time.

I get what you are saying Ale88 Bruh, but i don't think it is fud, especially because of some of the recent events that have happened with centralized exchanges and services. And i noticed that if people approaching this BTC world for the first time start off with centralized exchanges, they tend to continue with it, forget that BTC is actually a decentralized network and even believe that without Binance BTC won't survive, so i think strongly debunking all these and trying to make them see decentralization as the way to use BTC is the right thing to do, and should not be called fud.

[o_e_l_e_o]

So, as I see it, it's just a lot of unnecessary FUD, business as usual.

I wouldn't say it is fud. There was a legitimate vulnerability, which thankfully (this time) was picked up when only minimal damage was done. What if the bug went unnoticed for months, and resulted in losses of hundreds of millions which Binance were unable to cover?

This is part of the risk you take when using closed source software like Trust wallet. It can be filled with all kinds of bugs and vulnerabilities, and no one would be any the wiser until it is too late.