"Not your keys, Not your coins" is not enough

[Sim_card]

Life is not private but centralized because we are all citizens of one country or the other. We have being given out our information ever since we were given birth to starting from the hospital that your mom put to bed. Presently,we still have forms that we fill to enable us have access to some rights and benefits in our country. So why are we scared of using a centralized exchange that needs KYC for transactions to be successful. DEX is the best no doubt because of its privacy but it lacks giving its users access to the currency of their choice and other crpytocurrency. Traders need to use exchange for their daily business which makes a lot of people to use CEX than DEX.

[umbara ardian]

The problem we need to realize is that there is no clear control over these company. With blockchain, everyone in the network has the power to monitor the money going in and out. But the exchange is somehow still withdrawing or transferring money to a subsidiary company.

The lack of control is clearly the fatal weakness of cryptocurrencies. Founder Luna can immediately take off and fly away, carrying huge amounts of money. A coin is created that is accepted by everyone, but there is no one to guarantee that the coin will circulate.

The balancing problem of keeping the community under control with the trust of money has never been easy. To put it bluntly, the future could be the fatal weakness of cryptocurrencies.

[paid2]

So why are we scared of using a centralized exchange that needs KYC for transactions to be successful.

Non-exhaustive list:

-Risk of exit scams
-Risk of resale of personal data = possible identity theft
-Risk of hacking the platform and stealing your banking and personal data, as mentioned above.
-Risk of your funds being seized
-Risk of your funds being frozen and of having to provide documents you don't even have to recover them
-The CEX can become bankrupt
-CEX work hand in hand with the tax authorities, which doesn't help everyone
-They regularly block buying and selling when the price of BTC fluctuates sharply, which is annoying.
-They centralize BTC, which was created to be totally decentralized.

Mt Gox, FTX, and all the other examples mentioned in my first message + those present in the link I put to Gazeta's topic are enough to illustrate all this.

[imamusma]

iwantmyhomepaidwithbtc2, there is always a risk for anything that seems fine right now, including decentralized exchanges. We should just encourage everyone to change their minds about centralized exchanges, but maybe not force them to have the same mindset we want. In the end it is up to the individual trader and investor, but this thread can send the message that every bitcoin user will be exposed to risks regardless of whether they use a centralized or decentralized exchange.

So far I'm not a bitcoin maximalist who really cares about privacy. I still use banks, I still use centralized exchanges, and it's all because of my needs as a trader and investor. For me it's simple, we all have different desires in using bitcoin and we will also differ in our risk tolerance. We are all supporters of bitcoin, helping it grow and making it more useful as a currency and valued asset, even if we are not one of those who are strictly privacy advocates.

[BD Crypto]

So why not just advise and tell people to stop using CEX entirely? Bitcoin is by nature decentralized, why make it centralized? Why should a CEX that doesn't deserve to store our financial funds, our cryptos, deserve to be left with our banking and personal information?
Is it really that important to take the risk of having your funds frozen, losing your personal data, and enriching these useless people?

You just explained a nice point. And I also believe that in near future CEX exchanges will be avoided and users will only trust and use DEX exchanges. Already people are too much afraid of these CEX exchanges and about it's security and that's why DEX exchanges are having now higher volumes day by day. Many users are victim of CEX exchanges like MT Gox , FTX, IDAX and many more so people have fear about CEXs but they don't have another perfect option. But days changed and people are being much aware about their security.

Most of the traders choose CEX exchanges Because:

1. Interface and Features: It has user-friendly interface and trading features. CEX has a wide range of trading pairs, higher liquidity and but DEX has lower liquidity because they rely on the users to provide liquidity.

2. Transection time: In terms of transection times in many cases DEXs are lower than CEXs exchanges. But in terms of Security and anonymity undoubtedly DEX should be preferred.

3. Leverage Trading: CEX offers almost 200× leverage trading that is a very prominent feature of CEXs. Many market Analysts are making huge money by using high leverage so traders oftenly like high leverage option though it's much risky for everyone specially for beginners.

So in conclusion DEX exchanges should have more features added and should be a perfect trading platform so that traders can trade with full security. Because Bitcoin isn't only a cryptocurrency but also an asset. And I believe it will be implemented soon and DEXs will be more upgraded for the Traders. That time the era of CEXs will be ended.

[so98nn]

Yes this has been the Tag line ever since now and would love to follow it always after having few bad experiences with the exchanger. The first incidence was during the Zerodha collapse in India when I had most of the funds on zerodha. The problem started when Zerodha grew very big in very short period of time. They had this charm of attracting peeps on their platform with easy to use exchange facility, cheap rates of fees, faster transaction etc. However it was deceiving factor to get into it. That’s how I lost the touch with wallets which are non custodial. But after it collapsed most of the funds were ceased and were locked for very long time until banks unlocked them for us. Since then I’m not trusting any exchanger at all.

[Faisal2202]

You have made a great post dear op, your suggestions of Dexs have convinced me to try them as I was not very fond of Dexs due to many reasons. So, now I will try to at least try them because you are also a ranked member of this platform and I think this is enough for me to trust your suggestions.

Thanks for it and I totally agreed with your point but many used to say the same statement "Not your keys, not your wallet" which I think is wrong, but to some extent only, and I have had some discussion on this issue here before a few days ago and I came to a point that, whatever you do, best practice is to remain as much self custodial as possible because in crypto we should not trust anyone with our valuable assets.

And you mentioned the reason of why most people trust CEXS over DEXs due to UI. What i think is they trust CEXs due to their traditional mindset of depending on others so that they could blame someone for a mistake they do not want to accept. And this nature will also change once the total decentralization of BTC will be adopted by adopting the usage of DEXs. well amid of these DEXs you have mentioned there are many other options available to use CEXs without KYC which i think is also a cool alternative way to make people at least think about it.

[Z-tight]

And you mentioned the reason of why most people trust CEXS over DEXs due to UI. What i think is they trust CEXs due to their traditional mindset of depending on others so that they could blame someone for a mistake they do not want to accept. And this nature will also change once the total decentralization of BTC will be adopted by adopting the usage of DEXs. well amid of these DEXs you have mentioned there are many other options available to use CEXs without KYC which i think is also a cool alternative way to make people at least think about it.

There are centralized exchanges that kyc isn't mandatory, but they will make it mandatory someday just as KuCoin has recently done, so if you want to use no-kyc centralized exchanges to avoid kyc, you should know that soon you'll be mandated to provide it.

Take note that if you use centralized exchanges and make a mistake that costs you your funds, the exchange is not going to refund them to you, there are people who use centralized exchages because they wrongly think their money is 'insured' in them, if you or the exchange is hacked, the money you stored in there is lost.

[The Cryptovator]

You seem to be expressing frustration with the repetition of certain information. It is indeed unnecessary to mention centralized exchanges separately when discussing the importance of holding your own keys and funds. Since centralized exchanges do not provide you with control over your private keys, it is implied that they fall under the same category as custodial wallets.

In summary, if you are not in possession of your private keys, it is advisable not to store your funds in that particular service, be it a centralized exchange or a custodial wallet. It is worth noting to add with this sentence about hardware wallet that forum users commonly recommend the use it, as this practice is widely recognized and established.

[mendace]

This is one of the craziest threads I've ever read. We do not compile KYC exactly for the reason that the nature of Bitcoin is totally opposed to an identity verification.  Even if the blockchain is transparent, it remains difficult to identify an identity with an address, at least one that does not do an excellent job of chain analysis.  Bitcoin is born to make our financial life free and not persecuted by the governments.  Even if your request is always valid and there is no change of opinion, it's because you're looking Bitcoin at it from the wrong side.

[_BlackStar]

I guess some of us are hypocritical users - I mean they talk about privacy but they still use centralized exchanges. Of course -  it's good when they really believe they can protect their financial privacy properly without getting involved in anything on a centralized exchange or any centralized platform.

But each of us is a citizen who is basically still subject to the laws and rules of the government. We can protect our privacy - but are you forever evading taxes on your assets or wealth? Of course - this is a question I'm always thinking about when we actually prevent the government from knowing how much wealth we have on bitcoin.

[Myleschetty]

Yes, it is good for every Bitcoin enthusiast to be more concerned about their privacy but it's not yet the time that people will stop using the CEX because I don't think there yet a big DEX that provides cryptocurrency trading into all local currencies (or does the Bisq exchange do that?) and this is the reason why someone like myself still uses CEX if there a DEX that does this in a secure manner we can then blame people that make use of CEX.

[paid2]

You seem to be expressing frustration with the repetition of certain information. It is indeed unnecessary to mention centralized exchanges separately when discussing the importance of holding your own keys and funds. Since centralized exchanges do not provide you with control over your private keys, it is implied that they fall under the same category as custodial wallets.

In summary, if you are not in possession of your private keys, it is advisable not to store your funds in that particular service, be it a centralized exchange or a custodial wallet. It is worth noting to add with this sentence about hardware wallet that forum users commonly recommend the use it, as this practice is widely recognized and established.

That's why I wrote :

However, every time I read this on the internet, people stop at the Bitcoin storage step. That's not enough. There's another important step: exchanging Bitcoin.

I am not talking about the fact of storing your BTC only, I am more talking about the place where you exchange it

[Casdinyard]

« Not your Keys, Not your Coins ». « Don’t keep your Bitcoin on exchanges »

These advices are excellent, and no rational person with a genuine interest for Bitcoin should ignore them. There's no need to explain why, when you consider the number of scandals, scams, exit scams and accounts frozen / seized by the different CEX; because, let's not forget, CEXs work hand in hand with governments.
All the people advising this are therefore informed that CEXs are not reliable, do not work in our personal interest, and rightly so.

However, every time I read this on the internet, people stop at the Bitcoin storage step. That's not enough. There's another important step: exchanging Bitcoin.

So why not just advise and tell people to stop using CEX entirely? Bitcoin is by nature decentralized, why make it centralized? Why should a CEX that doesn't deserve to store our financial funds, our cryptos, deserve to be left with our banking and personal information?
Is it really that important to take the risk of having your funds frozen, losing your personal data, and enriching these useless people? Who wants to contribute to CZ's wealth, or encourage Coinbase in their disgusting practices?

Some will reply that CEX users choose "convenience ". Even that's not true! How is passing your KYC to Binance and using their UI easier than installing/using the Peachbitcoin (for example) app? It’s not! The only reason CEXs are in this position is because they benefit from substantial advertising resources.

We have effecient, fast, simple, user-friendly and totally P2P solutions at our disposal. For example :

-Bisq, a great P2P exchange, focused on privacy
-PeachBitcoin, their motto is #KYCfree
-Robosats, simple and efficient for those using Lightning network
-Majestic Bank, where you can swap BTC and XMR in a privacy-friendly way
-LocalMonero, another P2P exchange platform ; privacy focused

There are plenty of others, which you can easily find on kycnot.me

So why not advise people to use these services, in addition to advising them to use a non-custodial wallet?
Why shouldn't we be as enthusiastic about advising people not to use and register on CEX as we are about not storing their BTC there?

Not your keys, not your coins. No CEX at all.


P.S. : In this topic I'm not interested in altcoins and launchpad / launchpool type products, I'm only talking about Bitcoin exchange and storage. Personally, I don't think any launchpad justify a KYC procedure, but it's up to each individual to determine his or her priorities.


For those who want to read more on this subject, I highly recommend this topic from GazetaBitcoin

While I agree with you, and truth be told I support with all my heart and soul the novel advocacy that bitcoin drives thanks to its decentralized nature, there's a method to the madness that these people who support and use CEXs are under.

For some, it's the convenience that it brings, "don't worry about the KYC process as they say, it's the one that's got 5 stars in the App Store, it got good reviews on Google Play, and a lot of people around me are using it, so why shouldn't I?" is some of their argument, which is a strong one at that too cause for me, there's little that could compete with convenience and efficiency, two things that CEX are able to do so with finesse. The paradigm is slowly changing however, as more and more people see how flawed the CEX world is, so in the future, it's pretty possible that more people use decentralized no KYC platforms in stead of the ones that we use right now.

[jeraldskie11]

I think if you say "not your keys, not your coins" consider that you don't have to use CEX. Because what I have observed in the market is that when terms to this kind of exchanges you don't own the private key. You ask why people choose CEX, in my opinion, it's because of CEX is fast and you can easily transfer funds to Funding, Spot Wallet, and Futures Account without any fees. In fact, people mostly uses this exchange for businesses. So since "not your keys, not your coins", it's better to stay away your funds to CEX when you're just holding it for a long time.

[CryptSafe]

I think if you say "not your keys, not your coins" consider that you don't have to use CEX. Because what I have observed in the market is that when terms to this kind of exchanges you don't own the private key. You ask why people choose CEX, in my opinion, it's because of CEX is fast and you can easily transfer funds to Funding, Spot Wallet, and Futures Account without any fees. In fact, people mostly uses this exchange for businesses. So since "not your keys, not your coins", it's better to stay away your funds to CEX when you're just holding it for a long time.

I think in terms of trading, CEX got more advantage than DEX as CEX have a good platform and base for traders to ply their trading. No fees and easy access to funds instead of paying fees to transfer or swap continuously but at that, your funds are still not safe. Your details with them are not secured at some point, they are likely going to leak your information to third parties in exchange for whatever they deem fit to get. So the idea of "not your keys, not your coin" is not bad but a piece of advice in advance to take caution while dealing with CEX as they can not be trusted to handle funds and data safely.

[drwhobox]

Many people trade on CEX because of the flexibility of the exchange. We all know that CEX is controlled and followed by governments, but because of the features and flexibility it offers people are likely to trade here. If DEX has no limitations people would not trade on CEX ever.

[Wrathofcoins]

I think the only main problem its most of the people still doesnt use the correct tools, its like i put an screw with a plier instead of a screwdriver.
Well this its the same thing, the exchange like his name says its for exchange and make movements, not to save your coins, but most of the people use them like a wallet, so from that comes the troubles.

Its easy as that. Use the things correctly and you are not gonna have any issue.

[Kakmakr]

It sounds very simple to do that, but we have a problem with many people being used to what is on offer from the Fiat financial system. People do not just use centralized services for the convenience, but rather for the "trust" and "security" that it offers.

The products that you listed are anonymous, but it is unregulated and inherently more risky. People are not used to that, so they look at products that are more in line with what they are used to.

I think most people do not know what the difference is between centralized and decentralized services and they simply do not care. 

[Blitzboy]

Your analysis is sharp and powerful. You want Bitcoin's decentralization back. In Bitcoin, "Not your keys, not your coins" emphasizes personal responsibility and control. We should apply this to Bitcoin exchangers too. You're right that secure Bitcoin storage is discussed more than secure, decentralized exchanges. Decentralized peer-to-peer exchanges show increased hostility to centralized exchanges and its concerns, such as privacy breaches, suspended accounts, and governmental interference.

I agree that we should advocate for Bisq, PeachBitcoin, Robosats, Majestic Bank, and LocalMonero as much as we do against centralized exchanges. Enhance decentralization, privacy, and individual control. The community should passionately support this cause. Celebrate our trustworthy, efficient, and truly P2P options. Let's promote these services. Bitcoin is about decentralization. Lets honor that fully.