Why non-trader beginners prefer to leave their BTC on CEX?

[Fiatless]

Totally agreed, i also do not advice anyone to trust CEXs but neither DEXs too. Let me ask you a question that, Did you know the victims of FTX and MT Gox exchange are receiving their funds back? Because they are receiving their funds back but in batches. The point is when you are on CEXs you still got a chance to make some arrangements and still have hopes that you might get your assets back.

Sometimes decentralized wallets indeed suffer from hacks but such events are rare compared to centralized platforms. That is why we have to choose open-source wallets so that such attacks can be easily identified and action will be taken. Decentralized platforms will be my option because it gives me the opportunity of having full control of my funds. The responsibility of keeping my wallet safe is less risky than committing my investment to someone else.

It's not just a lack of information, it's also a lack of education. The Internet and all its risks have been introduced without prior training, without any courses on cybersecurity, on personal data and why it must be protected.
Many people are not ready to manage this security on their own and therefore not at all ready to manage a non-custodial wallet. We need lessons at school like in El Salvador. I learned everything on my own, even computers. It's not easy and it takes time. You have to do it in addition to your job, your family, all the other activities.

The government would have been the best body to champion the introduction and teaching of cybersecurity and privacy courses in the crypto space. But because the government sees the sector as a competitor, they preface to force citizens out of the sector instead of educating the people. They prefer to refer to Bitcoin and others as a risky sector that should be avoided. They are doing everything possible to scare people out of the space.

The efforts of some Bitcoin advocates are not enough and sometimes this vital security information is censored by the government. This means we have the responsibility to do our research and learn how to protect our investment. It might be difficult because of so many other responsibilities craving our time and attention, but we still have to create time to learn.

[Z390]

Those that I know and very close to me that leave their assets on exchanges are all crypto traders, they have no choice as a daily trader, the stress and extra payment of withdrawing and depositing time to time is what they don't like.

They only move out their profits from exchanges but not the initial trading capital, it always stays on exchanges, and I don't see anything wrong here unless the amount is very big, so far they keep moving their profits out, even if the exchange closed some day, the profits they have made will cover up.

If you are not a daily trader and you leave your asset on exchanges you are the definition of stupid ass fellow and you need to be thought some lesson so that you can start thinking straight, non-custodial wallets exists so that no one can control your funds.

If you don't want to use it, something else will teach you how to use it, keep holding your assets on exchanges.

[Lucius]

Why non-trader beginners prefer to leave their BTC on CEX?

I think that one of the most important reasons is that at any time they want to have the opportunity to sell, and sometimes at times when the price rises 10% or more it is not possible to react quickly and make a profit - and that is all that matters for most. In addition, the great leader CZ concluded in his great and wise statement that 99% of all users will sooner or later lose their coins if they keep them in a non-custodial wallet - and when the leader speaks, the subjects listen and obey the commands.

When you have a "friend" like that, you don't really need enemies.

[un_rank]

But did you heard any news in which DEXs have returned the assets of those who was victimized in any hacks or bankruptcies like FTX and MT-GOX. In my knowledge i didn't come to know about such news. IF you also have no answer then how can you say not to trust CEXs but DEXs (i know you didn't said to trust DEXs but there is only CEXS or DEXS so if you do not rust one then you definitely is suggesting other)

No one says trust DEX, we say do not trust any platform with your keys no matter how reputable. Decentralized exchanges is the umbrella phrase but it is referring to a P2P platform where the exchange at no point in the transaction holds the coins. You are trading directly with the seller and do not need to trust either the exchange or the other trader, you just have to verify the protocol being used.

Not every DEX is recommended. Check at https://kycnot.me/ for a list of different ones and the pros and cons of using any. What you should be looking out for is which offers non custodial wallets and is open source, then the privacy feature and other services.
About refund process, while it is unknown for many decentralized exchanges, you should bank on it on centralized exchanges either. MT-Gox scam happened years ago and I cannot point out anyone who has admitted they have received a refund.

- Jay -

[Dunamisx]

- New words that correspond to unfamiliar concepts.
- Tons of cybersecurity tips (mail protection, 2FA etc...)
- An anxiety-provoking environment that talks about hackers all over the place.
- Tools such as hardware wallets which seem complicated when some people already have trouble using a computer.

Fine and good it may be more task demanding making use of a cold storage or a decentralized means of storage of our crypto assets, we have to also have a look at the risk involved with using a centralized exchange, the value of our financial asset should be the major reason why we will always wanted to make use of a decentralized and more secured wallet for our bitcoin, but if only on the fact that we think the little we have on exchanges will not hurt us whenever any occurrence of loss in asset should happen, it's what we can afford to loose, most people make use of CEX by having just little amount they can afford to loose there while their main holdings are on cold storage.

[CryptoHeadlineNews]

whereas IRL in France in particular asking a question is sometimes considered as a sign of stupidity (which is quite the opposite I think. I'm not ashamed to say I don't know or I don't understand).

That's why newbies prefer CEX in my opinion because they feel safer and at least in a more familiar environment like their banking app (!).

For me, I think the main reason why most non-trader beginners still having their BTC on CEX is as a result of ignorance & secondly, it's ability for users to invest their idle BTC and get paid a commission every day, week or month depending on the duration & investment plan which Noncustodial wallets don't have, and an added advantage to CEX just like Binance which offers a 0.43% Annual investment rate for BTC.

[sokani]

<snip>

There are many reasons as to why beginners store their Bitcoin in centralized exchanges but these are my own personal views and might differ from what other persons think.

• Ignorance: Most people are not enlightened enough to know that if it's not your keys, then it's not your coins and they trust CEX with their Bitcoin.
• Complexity: Because of the sensitive nature of seed phrase and storage keeping, some persons are afraid of losing their asset if they mistakenly lost their devices as well as seed phrase. They feel if the have their Bitcoin in exchanges and they forget their password, they can always reset their password and have access to their funds.
• Mempool high transaction fees: This might come as a surprise but it's actually true. During the mempool issue that resulted to Bitcoin high transaction fees cost, a friend of mine after buying Bitcoin from CEX prefers keeping it there until the fee comes down.

[Becassine]

People is only looking an easy way to buy Bitcoin, that's why they ended in centralized exchange. I've seen Binance ads in everywhere when it's related with cryptocurrency, what make it's bad because they wrote Binance is a safe place to hold your coins. Most of people wouldn't think about the long term effect, as long as the site is right now looks safe, it's good to go for them.

Many people are not ready to manage this security on their own and therefore not at all ready to manage a non-custodial wallet. We need lessons at school like in El Salvador.

Where did you read if El Salvadorian schools teach about non custodial wallet? AFAIK they have their own wallet e.g. Chivo, it's a custodial wallet where you need to submit your KYC, but the good thing they didn't force all their citizens to use this wallet.

No doubt I expressed myself badly. I was not talking specifically about wallet, but about education in the broad sense. Everything about the bitcoin environment and how to protect yourself on the internet, as "Mi Primer Bitcoin" offers. https://miprimerbitcoin.io/

It's not just a lack of information, it's also a lack of education. The Internet and all its risks have been introduced without prior training, without any courses on cybersecurity, on personal data and why it must be protected.
Many people are not ready to manage this security on their own and therefore not at all ready to manage a non-custodial wallet. We need lessons at school like in El Salvador. I learned everything on my own, even computers. It's not easy and it takes time. You have to do it in addition to your job, your family, all the other activities.

Education is not enough. They will more easily forget their lessons if they don't experience in the market, see more bad reports on how people lost their bitcoins by scam centralized exchanges.

Like safety rules, they can be taught at school but not all of them will have safe practices. Education is a most important thing we can do and we must start with education. They must start with educational course on bitcoin wallets, what to use, what to not use and spend time for practice.

Education is that: to learn and to put into practice. If you learn music theory without having a musical instrument, what's the point?

As far as cybersecurity is concerned, people should already be awareness: people do not even realize that posting photos of their children, not securing emails, not using a virtual credit card etc etc is already potentially dangerous. Before even learning, they have to understand why they have to learn and what it is for. Confidentiality or protection of personal data are abstract data. Not to mention financial education. Most people have never heard of CBDC.

There is therefore still a very long way to go before people (and companies) can venture onto the Internet without too much danger. CEX probably seem safer to them, even if ultimately using a non-custodial wallet is not so complicated.

I too still have a lot to learn.

[Coyster]

Complexity: Because of the sensitive nature of seed phrase and storage keeping, some persons are afraid of losing their asset if they mistakenly lost their devices as well as seed phrase. They feel if the have their Bitcoin in exchanges and they forget their password, they can always reset their password and have access to their funds.

It is stupid for one to think that way, what assurance do they have that the exchange is going to keep the assets safer than they can, if they took a few minutes out of their time to research, they'll find out that many exchanges have been hacked and assets were stolen, if exchanges were the safer option, how come many of them get hacked every now and then or they just play around with depositors funds for more profit and lose it.

There's nothing complex about using non-custodial wallets, and people who think it is complex should prolly not use Bitcoin until they understand that it is what makes them their own bank, if exchanges have your keys, they are your bank.

[Dimitri94]

The most simple thing why many people prefer to leave their Bitcoin in CEX is, they buy Bitcoin in order to earn money.

It's inevitable all people like to earn more money, but their main reason they buy Bitcoin isn't to earn money, but they buy due to decentralization, verifiable, security, and privacy. There's no way to hide your wealth if you still depend on centralization e.g. government, bank etc. There's no way to achieve freedom and not getting controlled if you still depend on centralization.

I agree with you that not all goals are the same. Especially in the case of Bitcoin because there are many coins where investing can have huge profit potential. But the reason why people invest in Bitcoin is because it is decentralized. Most people use cryptocurrency because it allows them to work anonymously, but platforms that are centralized do not offer such benefits. Also we are well aware of centralized coins where there is scope for scams but it is completely different with Bitcoin. Bitcoin is the best because of reliability, security and privacy.

[Synchronice]

That's why newbies prefer CEX in my opinion because they feel safer and at least in a more familiar environment like their banking app (!).

Personally, I must have taken at least 3 years to connect a Ledger, being discouraged in advance and because I didn't really have time to understand how it worked. (In the end it was much simpler than I had thought.)

To my mind, people prefer CEX because it's easy to use, has multiple trading and investment option, is easy to recover, has desktop and mobile app, etc.
By the way, you should have learnt in 3 years that Ledger is the worst wallet because of how dishonest they are but probably since you are from France and Ledger is headquartered in Paris, you decided to trust it more than other wallets. To be honest, we don't have much choice with hardware wallets that support altcoins but we have good choice if you are looking for Bitcoin-only wallet, I recommend you to check Coldcard and for easier interface but the same security - Passport Foundation.

[Becassine]

Complexity: Because of the sensitive nature of seed phrase and storage keeping, some persons are afraid of losing their asset if they mistakenly lost their devices as well as seed phrase. They feel if the have their Bitcoin in exchanges and they forget their password, they can always reset their password and have access to their funds.

It is stupid for one to think that way, what assurance do they have that the exchange is going to keep the assets safer than they can, if they took a few minutes out of their time to research, they'll find out that many exchanges have been hacked and assets were stolen, if exchanges were the safer option, how come many of them get hacked every now and then or they just play around with depositors funds for more profit and lose it.

There's nothing complex about using non-custodial wallets, and people who think it is complex should prolly not use Bitcoin until they understand that it is what makes them their own bank, if exchanges have your keys, they are your bank.

It may be stupid to think like that, but it's true. We have been so infantilized for so long that we no longer know how to do anything on our own. One day we gain confidence and our whole life changes.

That's why newbies prefer CEX in my opinion because they feel safer and at least in a more familiar environment like their banking app (!).

Personally, I must have taken at least 3 years to connect a Ledger, being discouraged in advance and because I didn't really have time to understand how it worked. (In the end it was much simpler than I had thought.)

To my mind, people prefer CEX because it's easy to use, has multiple trading and investment option, is easy to recover, has desktop and mobile app, etc.
By the way, you should have learnt in 3 years that Ledger is the worst wallet because of how dishonest they are but probably since you are from France and Ledger is headquartered in Paris, you decided to trust it more than other wallets. To be honest, we don't have much choice with hardware wallets that support altcoins but we have good choice if you are looking for Bitcoin-only wallet, I recommend you to check Coldcard and for easier interface but the same security - Passport Foundation.

I didn't say I was using Ledger, I said it took me at least 3 years to plug it in. It was a gift. I have a bitbox and I find the interface simple and practical.

[Vaculin]

They do this because they were introduced and guided to create accounts to buy bitcoin on centralized exchanges. They were not taught about risk of leaving coins on centralized exchanges and they think they can safely store their bitcoins in their accounts.

Reminder: do not keep your money in online accounts

If they were taught about risk, like above reminder, they will use non custodial wallets.

That could be the very best reason mate why they start trusting CEX despite of its risk. What’s more important for them is just to buy and sell bitcoin and make some profits, not realizing that they could lose all their coins in an instant when this CEX becomes insolvent and is force to stop its operation. Not all have seen this coming, but this is highly possible to happen since CEX can never be reliable forever.

[dansus021]

That's why newbies prefer CEX in my opinion because they feel safer and at least in a more familiar environment like their banking app (!).

Personally, I must have taken at least 3 years to connect a Ledger, being discouraged in advance and because I didn't really have time to understand how it worked. (In the end it was much simpler than I had thought.)

Yeah same as me back couple year a go think that Centralized Exchange has the same environment as the bank but the truth is not. Tho even bank with high security is still can be hacked in some way but stealing money seems impossible to do in bank and if we can steal money from bank we might see dozen ton of police and government agency that will start investigating.

that is the difference CEX in other hand can be hacked and can lost of user money and sometimes it can be tracked and since cex at some point is not regulated any government will not take seriously.

and yes Personally,  i just bought a hardware wallet couple of years ago and its safe pal some users here don't recommend it because its a closed source and so on. so maybe im looking another alternative after this.

[Dr.Bitcoin_Strange]

Ofcuse it's obvious that the reason why most crypto newbies leave their coin on CEX is because they have no good orientation about security in the crypto space, if they really do have the idea that with their coin on CEX, it's not really in their full custody, then they will always want to keep those coins off centralised exchanges as long as they don't have any urgent need for the coin. I did make the same mistake in the past, but I really got a good education from my friend, which is why I should not store my coin on CEX.

OP, sometimes people also don't really check up on Blockchain updates or read crypto-related content; otherwise, they would be more educated in the security aspect of crypto. One must not wait for spoon-fed information first, because sometimes before that information can reach them, they might have fallen victim to a scam.

[Becassine]

OP, sometimes people also don't really check up on Blockchain updates or read crypto-related content;

It's certain, I had missed the NEO update and they no longer appeared in the wallet. Luckily a very kind and knowledgeable bitcointalker solved the problem for me.

[Kasabus]

Because they always believe that CEX are like banks, your coins or funds are safe with them. But for real traders, it’s a different thing. It’s only good to use CEX only when you decide to trade, but it will never be good and suitable enough to leave btc in exchanges for long term safekeeping. That is completely risking your bitcoin, because the moment you put it in an exchange, that is not your coin anymore, that is already owned by CEX, which means losing your full control on your own bitcoin.

[icalical]

Yeah I totally agree that most of new people in Bitcoin don't want to setup their own wallet is because they don't want the extra step, however I think there another reason like the person is not yet fully committed to Bitcoin so they left the Bitcoin on their CEX wallet, so incase they saw the Bitcoin price dropping they can easily and quickly sell and cashout their Bitcoin again.

[paid2]

If this person is not disgusted after a bitcoin hack or crash, he/she must face:

- New words that correspond to unfamiliar concepts.
- Tons of cybersecurity tips (mail protection, 2FA etc...)
- An anxiety-provoking environment that talks about hackers all over the place.
- Tools such as hardware wallets which seem complicated when some people already have trouble using a computer.

It's very true, Bitcoin (like all cryptos in general) suffers from excessive mystification, even though it's fundamentally not complex to use. As the few feedbacks from the adoption of BTC and LN in El Salvador clearly show, a simple wallet, with an effective UI, seems essential if we want users to head away from a CEX.

I think there are more factors involved, and there are (almost) as many reasons for CEX users to store their BTC on a CEX wallet as there are CEXes users.

For example, large CEXs are translated into many different languages. For non-English speakers, this is a real advantage; most of the documentation, videos, and explanations found through quick (I mean non-deep) researches are in English in general, and I think CEX may also seem simpler to them from that point of view. That's why I like so much the Local boards concept on Bitcointalk for example, we need to have good documentation in as many languages as possible.

There's also the fake sentiment of protection that CEX offers, a bit like 3.0 assistance. As you wrote, many people are aware of the risks associated with self storage (such as loss of private keys, unsafe backup, etc.), but they think little of the risk of having their personal data stolen in the event of a CEX hack, and so use the service without being fully aware of the risks involved.

I'm like you, I only use P2P whenever possible, I avoid KYC and centralized platforms. However, wondering why people prefer Binance to Bisq or Peachbitcoin is like wondering why they use Google rather than Duckduckgo, why they use Gmail without PGP rather than privacy-focused services etc.... Answer ? Probably convenience, laziness, lack of knowledge, fear of learning things unknown at the moment...

Plus those who are in it for the fast money only and aren't interested in the essence of Bitcoin will always be CEX users.

I ended up changing shitcoins into btc and putting that on a hardware wallet (but not the ledger whose interface I don't like). Finally I applied the maxim "not your keys, not your coins"). Maybe that's the beginner's path after all? Going slowly towards this goal, without being too greedy or too naive and doing things at your own pace (I'm particularly slow I think...)

It's better to take things slowly, leading to a solid foundation and knowledge, than to be hasty and immature, especially when it comes to crypto and money 

[asbani]

Even though I feel everyone will disagree with me but I'll raise my opinion anyways and not care...I am not always right btw but thats just how I feel

I agree with you on few points of course, but I disagree with other points...mainly you calling people who use CEX are newbies, If you consider me as a newbie which I might be then thats fine, the word itself doesn't bother me. But I held my first bitcoin by sheer luck back in 2013, I did not even know what wallet is, someone tough me how to open a wallet and I did as he instructed then received my first ever transaction. It was an xapo wallet back when it was free of use. Regardless of that I hold some coins in my cold wallet/metamask/electrum and some on exchanges as well. and I do actually prefer the exchange over my other wallets and here's why..its all a matter of person opinion.

1) swapping/selling/buying/withdrawing. Its all easier on an exchange than a normal wallet where you need to find a DEX to swap coins, approve a transaction with a fee, then pay another fee to transact. In an exchange however its noe fee.
2) p2p going in and out of the exchange is made simple, with zero fee's I can swap my coins/usdt into my countries money and vice versa, safely and easily.
3) not my keys not my coins right? but if the exchange is real solid I can trust that my coins are safe. Trust me I know what happened to FTX and other exchanges I am aware....but I didn't choose ftx 7 yrs ago for a reason, you must conduct a good research.
4) you have many options in an exchange like farming,trading,options,saving,liquidity farming.....I know i know you can do those also in a dapp farm but again its not as easy, you need to find the good dapp first, you need to double check their website everytime & see results, ultimately in the exchange its all in one place.

Meanwhile the disadvantage of the metamask/coldwallet/electrum is that if you want to do anything with your wallet its too much work, allow me to elaborate. We need to first initiate & set mind for the man/lady who will use their wallet ok? To do this we need to get out of my own bodies & what we know, and we need to get inside of the body of a man/lady who is not a computer savvy, in other words someone like your grandmother. I am completely honest here, for crypto world to succeed we need to think of these people. I am not only saying they are old and not into technology but what I am saying is, alot of people even youngster are still like that. An example is my wife, she is not a computer/tech savvy & will never in a million year could learn about transactions, hash, pulic/priv kes, trx, dapp, dex, cex, and much more.....lets be honest here guys these type of people are the majority of the world and if we don't find a way for them to make crypto useful then its no point. Let me explain more....if I give my wife or a non-tech person a cold wallet which has bitcoins, do you think they will be able to get the money out of it? The answer is HELL NO, I'm sure if today i give my wife one of my priv key she will not even fathom how to get out the coins, she probably will lose them. Thats the main issue

Lets give these people a name, "The majory of the public (TMOP), so if these TMOP guys not come into our space with the ease of use, then it's our loss. How do we get them in? to use some systems that are a little bit like banks, I know the main idea of bitcoin is to move out of the medium/middle man but its very difficult, we have to have middle man (CEX), to make it easier to use and safer for the TMOP.

You may ask, how is CEX SAFER for TMOP, its the opposite right? No for them IT IS safer to be in CEX than their own priv key trust me.

For them they could be easily hacked using a wallet, they could have all sort of stuff in their computers, they could connect to a bananacakeswap thinking its panecakeswap and click "Connect" how would they know? they wouldnt, again I know you would know, but you have to get out of your own body and get into their body to see from their perspective. these fellas can easily click transfer and lose all of their coins thinking they are getting airdropped something from a telegram message.

Listen, when these people go to a good exchange with good safety record & with having 3 different safeties such as "password + 2FA + email confirmation", then they dont need to connect to any other website ever. Plus they could just stay and see what the exchange offers, then p2p get their money out of it at any time. Also they can install anti-fishing seed inside of the excahnge, so now they have 4 safeties & never have to check any website/connect anywhere, just stay in the exchange until they cash out.....thats what we need.

I am sorry for the long post but as you can see I disagree with 90% of you guys for the above reasons. I just want cryptocurrency to get bigger and this is the only way. Otherwise it will be "Crypto-scammurecy" instead of "Cryptocurrency" which it already is a big scam space if you think about it, and where do most the scams happen? In telegram with metamask approving/connecting thir wallet to places thinking its another place type of people. Its painful to see.