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

[Becassine]

People who work in IT probably do not realize how difficult the crypto environment can be to understand and for some even become downright anxiety-inducing. Indeed, digital education has not, in my opinion, been properly done in many countries, especially in France.

This is how most people in their forties/fifties and over are completely lost in the digital world (especially in France). Companies do not protect their data and are easy prey for all hackers and individuals alike. So of course individuals know how to do bullshit on social networks, but there are many problems that persist and are here to stay for a long time.

Cybersecurity is an area that has really been left behind. Insufficient passwords, risky clicks on anything and so on.

In this environment where everyone learns what they can, no matter how and often quite badly, we can imagine that bitcoin is part of another world. When, however, a person wishes to hold bitcoin despite everything, the sum of the accumulated shortcomings is such that she/he becomes the ideal victim for all hackers.

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.

So in this context, it's no surprise that beginners prefer to leave their bitcoins on CEX, because they have less to learn in one go, just managing a password and 2FA, (and don't always use that). The stress engendered by bankruptcies such as those of FTX or the oft-repeated phrase "Not your BTC, not your coins" can indeed discourage more than one.

Moreover, in 'developed' societies of permanent recipients where people are no longer really self-taught (perhaps lack of time, intellectual laziness, lack of self-confidence, etc.), the idea of ​​being oneself accountable for their funds, with no customer service and no one to complain to is hardly/no longer an option.

It takes time to read and to learn, every day I learn something and when I look back over the years I have the impression of having naively walked on a minefield.

I take this opportunity to thank the people who really know much much more than me for never having been condescending by my sometimes simple (or simplistic?) questions, 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 (!).

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.)

The more I learn, the more questions I have and I tell myself that I would never have gone around the question. Fortunately, my children are older and I therefore have a little more time to learn, but the path still seems very, very long. I have lots of notebooks to put notes on to look at later, but I have so many notes...

I dropped CEX after trying lots of them mostly to see what they looked like, I never traded because it's a job and I'm not interested in it, I had shitcoins which no longer exist (but for which I had only invested a few euros), I don't understand anything about DEFI and NFT for me, it's a bit like fashion week, not very interesting either.

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...)

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[Solosanz]

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.

[SquirrelJulietGarden]

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.

[Becassine]

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.

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.

[Helena Yu]

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.

[Faisal2202]

It takes time to read and to learn, every day I learn something and when I look back over the years I have the impression of having naively walked on a minefield.

I take this opportunity to thank the people who really know much much more than me for never having been condescending by my sometimes simple (or simplistic?) questions, 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 (!).

Totally agreed with you. because i consider my self still a newbie as i have not test most of the crypto features and technologies yet like one of the big is Hardware wallets. Reasons are i had not any resources to buy them. I live in Pakistan and there was no Amazon here back then but now it is. The point is, most of the user prefer to stay on CEXs because they have no resources to get Hardware wallets. Or there Amount is not that big, that they wanted a higher level of security with HW. Because the security level we want is already provided by CEXs.

And newbies do not only use any CEX they do proper research to select one which could stay longer like coin base and Binance etc. Such exchanges no doubt a facing critical cases from different governments. But in my short period of time these exchanges do care about their Customers and whenever they have to leave some territory they ask they users to withdraw their assets by giving them a dead line. \

You said, it considered stupid in France i say not, country doesn't matter maybe the level of considering such question more stupid there which is obviously is not a good thing but overall, in the world most people who like spoon feeding are discouraged and disrespected too. Because they do not wanted to learn anything on there own they just ask question on any thing they want and do not hesitate to use their own minds. This what makes other angry. So, yeah that's happen all the time and everywhere.

[Zaguru12]

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.

I doubt some people will actually learn to take off their coins from exchanges. We can all blame all this on naivety or ignorance but the act of carelessness is also part of it, if the someone who actually values his coins and funds and the security of it then they would go extra miles just to safeguard them. But most of them do not just want to take responsibility of having to safeguard the keys and seeds themselves when dealing with self custodian wallets.

Also the higher number of people that still have their funds on CEX are mostly traders because to be sincere only those exchanges have the features that many of this day traders need to trade. And still even some of the experience traders who are actually after securing their funds just leave some certain amount there.

And newbies do not only use any CEX they do proper research to select one which could stay longer like coin base and Binance etc. Such exchanges no doubt a facing critical cases from different governments. But in my short period of time these exchanges do care about their Customers and whenever they have to leave some territory they ask they users to withdraw their assets by giving them a dead line.

Let’s be honest there is nothing like a trusted Centralized exchanges, there are many of these past exchanges that had better reputation than both the binance and coin base and they ended up biting the dust with peoples funds going down with them. Aside the privacy concerns of the centralized exchanges, the losing of ones funds is the biggest threat.

This exchanges that you mentioned that usually alert their customers to withdraw their funds are able to do it just because they were actually closing down. Do you think they would be able to do the same when it is hack or compromised in some way? Or do you believe they will return customers funds if been hacked?, I would say go and read about Mt. Gotx saga and you will find out that none of them can be trusted

[Faisal2202]

Let’s be honest there is nothing like a trusted Centralized exchanges, there are many of these past exchanges that had better reputation than both the binance and coin base and they ended up biting the dust with peoples funds going down with them. Aside the privacy concerns of the centralized exchanges, the losing of ones funds is the biggest threat.

This exchanges that you mentioned that usually alert their customers to withdraw their funds are able to do it just because they were actually closing down. Do you think they would be able to do the same when it is hack or compromised in some way? Or do you believe they will return customers funds if been hacked?, I would say go and read about Mt. Gotx saga and you will find out that none of them can be trusted

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.

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)

[Hyphen(-)]

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.

Mostly, even the people who introduce newbies to Cryptocurrency have less knowledge about the difference between centralized and decentralized exchanges. That is why they find it easy to introduce them to Centralized exchanges where they can easily buy, trade, and sell their coins. The only risk they probably tell them is that the market does go bearish and bullish sometimes; therefore, they will teach them how to monitor the market, buy when the price is down, and sell when the price is high. They don’t care about the personal information they submitted to the exchanges during KYC.

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

They may still find it difficult to use due to their laziness; they mostly want quick money, which means they have no time to learn. As a  result of that, they risk their privacy in the exchanges for some shitcoins that may end up going unnoticed.
Personally, I didn’t also know the difference between centralized and decentralized exchanges until I came to this forum. All I knew before was to buy my coins in the exchange, leave them there, and sell them when the price became high, then take my profits, not knowing that my privacy was at risk with a third party and that my coins were not in my control.

As others have already said, beginners need good knowledge and proper orientation on how risky it is to depend on centralized exchanges in order to put an end to such things.

[Coyster]

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.

You are definitely not assured of getting any of your assets back if you lose them in an exchange hack/breach, many a times nobody gets anything, or the legal process to determine how to return some of the funds to the creditors takes forever and in the end might not yield anything, even if people get something back, it might be nothing close to what they lost, etc, so don't count on this as a consolation and basically use a non-custodial wallet to store your assets.

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)

In a proper dex you do not deposit funds into the exchange like you do in cex, you trade directly with the other trading partner so you control your assets, that is why there is no single point of failure when you use good dex. Nevertheless, your assets should only be in your non-custodial wallet.

[SOKO-DEKE]

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.

Yes, a lot of newbies are almost taught by other newbies who pretend to know a lot about cryptocurrencies but actually know very little. I wonder how such people can properly mentor other newbies, especially when they don't understand the differences between centralized and decentralized exchanges and are too lazy to conduct their own further research to learn more about the investments they have made.

People now simply enter the bitcoin business eager to learn about  how to solely invest and make money, and easily forget about their security and privacy are more important.Seriously, if we do our research, we will find that a lot of individuals are abandoning their coins on exchanges. This is because people are first introduced to exchanges when they enter the cryptocurrency sector,people hardly introduced them to decentralized system.

[tvplus006]

...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...)

Such a long path of your development can be explained by the fact that you were engaged in self-education. Therefore, every time you learned something new, even more unknown things appeared in front of you. Of course, it would be easier to use proven tips, but we can definitely say that the experience you have gained will be more useful to you in the future, since you have thoroughly figured it out on your own.

[pooya87]

From what I've seen the newbies who leave their bitcoins on exchanges aren't "buying bitcoin", they are buying an abstract idea to make a quick profit. They have no idea what bitcoin is, they don't care either. This is also why they end up buying a lot of shitcoins too, they hope to make profit and shitcoins advertise quick profitability (ie pumps and dumps). That means they want money, so they basically deposit their money (ie. fiat) into a website (ie. CEX) and then try to make a profit on that money.
Note that they don't necessarily have to trade to be like what I explained. They are making an investment, like buying stocks through a stock broker. They don't "withdraw their stock" nor do they trade it, they buy and hold it with them hoping for profit.

This is why I don't think this is about "digital education".
Compare that with someone who has informed themselves of what bitcoin truly is and is buying it because they liked this decentralized currency not because they wanted to make profit. Those people regardless of their understanding of computers and stuff like that will go through the process of educating themselves and use a real bitcoin wallet to store their coins.

[BIT-BENDER]

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 don't know if you have checked what you just wrote properly, but I think it's wrong, but I would like you to convince me, how can saving you money on centralized exchange help one to make money.

Do not get me wrong everyone is always trying to make money that why some people buy Bitcoin in the first place so how can someone who is saving on a centralized exchange make more money than those saving in their private wallet or decentralized exchange.
The price of Bitcoin is volatile, if it rises it rises everywhere.

PS. It's very risky saving your funds on exchanges.

[Heisenberg_Hunter]

Bitcoin has been here for a while and majorly most of the people who has education are getting used to the keypairs and stuffs like that if they are willing to store bitcoin for longer term. Newbies or people who are interested in get rich quick schemes are willing to take profits by investing in shitcoins and move onto other shiny coins in the next run. This is probably the reason, they own their shitcoins on centralized exchanges instead of owning them on non-custodial wallets. Libertarians are interested in Bitcoin as it is free from government interventions and thereby they can have the liberty of owning a currency which is not being controlled by countries or states.

TBH we don't really need to have a dedicated education to start using hardware wallets or non-custodial wallets as majority of these apps and devices have been made easy and it is increasingly becoming common that even the enthusiasts with very less knowledge on computers have started using bitcoin by storing them in hardware wallets such as trezors. Historically speaking, wallets such as Ledger have been really helpful in onboarding new-comers but with the recent database hacks and their poor choice of breaking the privacy by uploading keys to centralized servers had put a distrust on them.

The more I learn, the more questions I have and I tell myself that I would never have gone around the question. Fortunately, my children are older and I therefore have a little more time to learn, but the path still seems very, very long. I have lots of notebooks to put notes on to look at later, but I have so many notes...

I don't understand anything about DEFI and NFT for me, it's a bit like fashion week, not very interesting either.

If you are involved in a technology which is quite new and has the ability to change the world, you need to update yourself regularly and keep learning at a faster pace than the current generational speed. New technology provides us with the opportunity for creating an impact on this planet and similarly they can also be quite dangerous if learnt the opposite way. During each and every cycle of the market, new technology in the cryptocurrency sector popped up (starting from Altcoins, Defi & NFTs) and each paved way to new business models and new industries over the decade.

[Frankolala]

People who leave their bitcoin in exchanges are not aware of the risk that is involved for doing so,some people that has the awareness feels that because it hasn't happened to them by losing everything that they have in an exchange when it crashes and feel ignorant of the consequences of their action.

 Laziness can also contribute to newbies leaving their funds in an exchange because they feel that it is stressful and prefer to buy their coins and leave it there believing that it is safe. The only reason why I think that anyone can leave his coins in an exchange is if the person is a trader but if you are not a trader then it means that you are gambling with your investment by leaving it in an exchange

[Faisal2202]

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.

You are definitely not assured of getting any of your assets back if you lose them in an exchange hack/breach, many a times nobody gets anything, or the legal process to determine how to return some of the funds to the creditors takes forever and in the end might not yield anything, even if people get something back, it might be nothing close to what they lost, etc, so don't count on this as a consolation and basically use a non-custodial wallet to store your assets.
......
In a proper dex you do not deposit funds into the exchange like you do in cex, you trade directly with the other trading partner so you control your assets, that is why there is no single point of failure when you use good dex. Nevertheless, your assets should only be in your non-custodial wallet.

I agree with all of your points well at least i have left no other option because you are correct. But all i am saying is, On CEX we still got a chance but on DEXs if things went wrong then we do not have any hope or anything to hold on. Because what's gone is gone.

And i do know that the complexity of recovering money is too hard for one. As, recent Centralized (custodial wallet) Atomic wallet hack has effected many users and i was reading on twitter that one person was able to recover his 1 million dollars with the help of some investigator (who is one of the best on twitter).

Overall, one of my friend once faced an issue in future trading, in which his trade was liquidated even before the liquidation price so he just contact the team on support and his assets were given him back. Can we do that on DEXs. AFAIK no, we can not do that because there is no team to handle your assets. Only you are the one to handle you assets.

Well, if i look from different angle then in the first hand the mistake in my friend's case was of that Centralized Exchange which might not happen if he is on DEXs. ( maybe i am taking it wrong).

[SquirrelJulietGarden]

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.

[Inwestour]

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.

Many of us on the forum learned everything ourselves, and worrying about safety is everyone's responsibility. There is a lot of information regarding security, there are even video instructions regarding hardware wallets, and many explanations why this is important.

Anyone who at least once was interested in the issue of security, could understand this thoroughly, the most important thing is to have the desire to do it. Beginners can store their coins on the exchange because it seems convenient to them, besides, at first it is usually small amounts and therefore it seems that there is nothing wrong with it, and they postpone the security issue for later.

[Coyster]

...But all i am saying is, On CEX we still got a chance but on DEXs if things went wrong then we do not have any hope or anything to hold on. Because what's gone is gone.

That's because proper dex work exactly the way Bitcoin does, if you lose your Bitcoin seed phrase or private keys and your funds gets stolen, you cannot get them back, that's part of the responsibilities of being your own bank, making sure you have adequate security so that your assets won't be stolen or lost.

As, recent Centralized (custodial wallet) Atomic wallet hack has effected many users and i was reading on twitter that one person was able to recover his 1 million dollars with the help of some investigator (who is one of the best on twitter).  

Atomic wallet is not a custodial wallet, Atomic wallet is a non-custodial wallet and their users have their seed phrases and their keys. I know nothing about this story of a person recovering their money in Atomic wallet hack, but don't believe any person/investigator who says they can recover your stolen funds (it is a scam).

...Can we do that on DEXs. AFAIK no, we can not do that because there is no team to handle your assets. Only you are the one to handle you assets.

Dex have mediation and arbitration team, but cases rarely get to them because it is easy for trading partners to trade peer to peer without running into any problem that requires settling.