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

[Darker45]

As I've repeatedly said, it's not that easy to be your own bank. Having full control of your money in this digital age isn't just like storing them inside a vault in your room. It entails a lot of responsibilities. Safekeeping your money means looking for the safest wallet. And there are certain criteria for that. So, that means you need to do some research. Looking for a safe wallet is different from keeping that wallet safe. There are a number of dos and don'ts for it as well.

And then your responsibility extends outside your wallet. You will have to be careful in dealing with emails and PMs in your social media account. You need to be vigilant in downloading apps, clicking links and ads, and so on. You should also learn how to safely store backups. If possible, you should also have some knowledge on encryption. You must also familiarize yourself with sim swap attacks, dust attacks, and so on.

[1714646563]

1714646563

[tech30338]

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...)

this is a nice post probably we have different opinions but people who work on IT priorities securty, before anything else aside from making things run smoothly, its is said that IT don't work too much but thats not the case when you are there already, there are works to be than when someone messed it up,
On newbies who left their coins i may add that, its not that they have less knowledge or experience some people wants it in a non complicated way, that is why they put their money on an exchange easy to access without knowing the risk of it, also they are afraid since there are some who gave a wrong links and think their funds will be hack or lost.
They maybe also don't know how to use other wallets at the moment but as time goes they learn other things on the process.
I think the best way for this newbies is to to teach them first how to use wallets , securing things , before teaching them to use CEX,
This is what I do when a friend wants to invest in crypto teach them how to secure and learn precautions before anything else.

[SquirrelJulietGarden]

As I've repeatedly said, it's not that easy to be your own bank. Having full control of your money in this digital age isn't just like storing them inside a vault in your room. It entails a lot of responsibilities. Safekeeping your money means looking for the safest wallet. And there are certain criteria for that. So, that means you need to do some research. Looking for a safe wallet is different from keeping that wallet safe. There are a number of dos and don'ts for it as well.

It relies on what you choose to use and to store your fund. If you choose fiat currencies, gold and store it at banks, vaults, you don't control your assets. If you choose to store it in vaults at home, it will cost you a lot of space for a storage location.

If you choose altcoins with smart contracts, they can become zero value if developers mint more tokens from thin air like Do Kwon did.

Bitcoin is a safe heaven to have an own bank and there will be no freedom of minting from thin air like tokens.

And then your responsibility extends outside your wallet. You will have to be careful in dealing with emails and PMs in your social media account. You need to be vigilant in downloading apps, clicking links and ads, and so on. You should also learn how to safely store backups. If possible, you should also have some knowledge on encryption. You must also familiarize yourself with sim swap attacks, dust attacks, and so on.

Having our own banks requires us to secure our own banks. So we must maintain our secrets, privacy and anonymity as much as possible. If we live like offlline, nobody knows us to have bitcoin, Bitcoin wallets, nobody will hack our wallets.

If we publicly talk a lot on social media about our investment in Bitcoin, we will have more risk.

[asbani]

As I've repeatedly said, it's not that easy to be your own bank. Having full control of your money in this digital age isn't just like storing them inside a vault in your room. It entails a lot of responsibilities. Safekeeping your money means looking for the safest wallet. And there are certain criteria for that. So, that means you need to do some research. Looking for a safe wallet is different from keeping that wallet safe. There are a number of dos and don'ts for it as well.

And then your responsibility extends outside your wallet. You will have to be careful in dealing with emails and PMs in your social media account. You need to be vigilant in downloading apps, clicking links and ads, and so on. You should also learn how to safely store backups. If possible, you should also have some knowledge on encryption. You must also familiarize yourself with sim swap attacks, dust attacks, and so on.

This is exactly my point you summed it up nicely! People (Non tech) wants someone/somebody to keep them safe. An exchange is not as bad as you think, consider them like a bank. I know I know the point of crypto to move away from the middle man. But again we need that for some type of people who still want to be protected by someone.

How many people lost their coins/btc lots of it because they did something wrong with the priv-key, or lost a hardware, or lost something? That will not happen in an exchange. I remember reading a post back in 2011 where a guy spend on his wallet and lost 9000 BTC, the story is famous he did it on a Image/CD linux boot system which means the files disappear after one boot.

Now tell a non-tech grandmother to do this with blockchain and privkey, pubkey...she will go mad, she wants a CZ or someone else to keep her funds safe and she just must save her FACE-ID with little bit of extra safety added in email, 2FA in email, 2FA in google, 2FA in exchange acc. Then she's good.

[lovesmayfamilis]

All right, OP. Most people are lazy. I read your post with interest, but I couldn't read all the posts, realizing that, in theory, everyone will be talking about the same thing. People are lazy, and many more think that what happens to someone will never happen to them. Human negligence turns into their own experience, after which people sober up and either begin to become neater or step on a few more rakes to understand their mistakes.
Speaking about the use of wallets, in fact, you need a lot of attention and a desire to understand. This applies to everything: someone is afraid of Linux systems, seeing them only as a command line, which seems to them like a monster, and someone simply does not want to read the network security manual. Knowing that CEX cannot be trusted, someone still leaves their funds there. There are two types of novices: some learn from the mistakes of others, others from their own. And this cannot be changed; everyone has a choice.

[bakasabo]

All right, OP. Most people are lazy. I read your post with interest, but I couldn't read all the posts, realizing that, in theory, everyone will be talking about the same thing. People are lazy, and many more think that what happens to someone will never happen to them. Human negligence turns into their own experience, after which people sober up and either begin to become neater or step on a few more rakes to understand their mistakes.
Speaking about the use of wallets, in fact, you need a lot of attention and a desire to understand. This applies to everything: someone is afraid of Linux systems, seeing them only as a command line, which seems to them like a monster, and someone simply does not want to read the network security manual. Knowing that CEX cannot be trusted, someone still leaves their funds there. There are two types of novices: some learn from the mistakes of others, others from their own. And this cannot be changed; everyone has a choice.

People are not only lazy, they are irresponsible. They prefer that other will take responsibility and duty to manage their life. They store crypto on CEX, they store money in banks, they use path navigator show them, they wait for others to do their work, instead of going home few minutes from school or work - they wait for being picked up, they wait when someone brings them spoon so they can start eating soup, while they can stand up and get that spoon themselves and etc. There are many more example when people wait until others do something, so that they can continue. I dont think that people are lazy, they are used to comfort and situations when others do things instead of them. They keep funds on CEX, but if someone offer help and move funds to their wallet, they would accept that offer without hesitation.

[lovesmayfamilis]

People are not only lazy, they are irresponsible. They prefer that other will take responsibility and duty to manage their life. They store crypto on CEX, they store money in banks, they use path navigator show them, they wait for others to do their work, instead of going home few minutes from school or work - they wait for being picked up, they wait when someone brings them spoon so they can start eating soup, while they can stand up and get that spoon themselves and etc. There are many more example when people wait until others do something, so that they can continue. I dont think that people are lazy, they are used to comfort and situations when others do things instead of them. They keep funds on CEX, but if someone offer help and move funds to their wallet, they would accept that offer without hesitation.

We are talking about the same things. Those people who are willing to accept help from others—why don't they do it themselves? Why don't they study everything themselves? In this case, laziness and irresponsibility become synonymous. Being your own bank is not difficult, but you need to make a little effort. The problem is that these efforts need to come from somewhere. For people who are accustomed to comfort, it is much more convenient to shift their responsibility to another; it will be the bank or the one who decides everything for them. People who are accustomed to comfort turn into fat, stupid, and lazy people whose problem is the laziness of their own brains.

[avp2306]

Answer is easy because they think its more convenient for them to leave their balances on exchange since they could able to trade it easily when a time they need to use those exchange. Although this is dangerous because we know hacking issue on exchange exist but this is reality since its also hard to transact especially when the feed is so high. We just need to be aware that we should not do it on huge balance and only those small ones where we can afford to lose since the risk of losing still there.

[uchegod-21]

Answer is easy because they think its more convenient for them to leave their balances on exchange since they could able to trade it easily when a time they need to use those exchange. Although this is dangerous because we know hacking issue on exchange exist but this is reality since its also hard to transact especially when the feed is so high. We just need to be aware that we should not do it on huge balance and only those small ones where we can afford to lose since the risk of losing still there.

The question in OP said non-trading beginners. So, we should assume the  beginners are not traders and yet they leave their funds on the CEX.
On the contrary, I have a question. If expert traders can leavehuge funds on exchange for trading purposes, why new comers cannot leave few dollars?
I am not saying that leaving funds on the exchanges is a good habit but then while choosing an exchange try to chose a reputable one that is not winding up tomorrow, so that you will not kill yourself because you forgot to transfer out your money.
Exchanges should be used as Exchanges and not as a personal wallet.

[CryptopreneurBrainboss]

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.

We have all been brainwashed that keeping our money , investment and control of our finances in general with centralized bodies are the best decision and we bought into the government lies which is why we're unconsciously draw to trust centralized platforms like exchanges instead of trusting our own ability to safeguard our investment. Non traders prefer exchange because they don't have to take responsibility if anything was to happen to their investment. They prefer to blame others than to blame themselves, this exchanges know this and they make their platforms very easy to use and understandable to gained the trust of the newbies to trust them with their coins.

If you have used any centralized exchange you'll understand why newbies prefer to store their coins on exchanges (which is totally wrong). This exchanges are very user friendly and they have other motivational benefits fo holding coins on their exchange. They have staking and saving features that enables all users that have coins on the exchange eligible to receive reward. The exchange are just manipulating their customers into leaving their coins on their platform but this is absolutely wrong as we should only store coins on wallets that give us full control of our private keys.

[Becassine]

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. (...)
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.

First I was talking about beginners who do not trade. Who do nothing special (Hold =/- DCA) and who should therefore rather use a cold wallet. Then I don't think we are in disagreement: at the beginning certainly for all the reasons I have listed, you feel more confident on a CEX. It seems easier and more secure and then we understand that it is not difficult to have a cold wallet.

The case of your wife has nothing to do with the subject: indeed if she knows nothing about bitcoin and she has to recover btc on a CEX or a cold wallet, it will be the same thing. She will have to learn. In addition it can even be more complicated on a CEX: indeed she will need your password, access to your phone, access to your email. Whereas with a cold wallet, you leave her the keys and she will have immediate access.

And it's up to you to explain to her now what she should do with it, or at least explain to her that your bitcoins have a value.

[Maslate]

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.

Because they are only taught about CEX and how they can be useful in buying and selling their coins, but they were not open on the possibilities that any time of the day, their coins will just vanish like a thin air when everything in CEX gets into troubled or compromised. And that they are closed to the idea that decentralized exchanges also exist, and that they are more reliable when leaving coins even in an indefinite time.

[coupable]

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.

Because they are only taught about CEX and how they can be useful in buying and selling their coins, but they were not open on the possibilities that any time of the day, their coins will just vanish like a thin air when everything in CEX gets into troubled or compromised. And that they are closed to the idea that decentralized exchanges also exist, and that they are more reliable when leaving coins even in an indefinite time.

We should not forget that it is never easy for a beginner to understand the basics of privacy provided by the blockchain when his first goal is to make a profit, nothing more. When Bitcoin is presented to him, it will be easier to rely on his banking culture, and this, in my opinion, is the easiest way to make it seem easy to him.
This is understandable for beginners, while the problem is with experienced users, who, despite their relatively long experience, still depend on central platforms for storage. These users certainly don't care about the principle of privacy, and on this basis they don't even care about the features provided by the blockchain until they get into trouble.

[Becassine]

All right, OP. Most people are lazy. I read your post with interest, but I couldn't read all the posts, realizing that, in theory, everyone will be talking about the same thing. People are lazy, and many more think that what happens to someone will never happen to them. Human negligence turns into their own experience, after which people sober up and either begin to become neater or step on a few more rakes to understand their mistakes.
Speaking about the use of wallets, in fact, you need a lot of attention and a desire to understand. This applies to everything: someone is afraid of Linux systems, seeing them only as a command line, which seems to them like a monster, and someone simply does not want to read the network security manual. Knowing that CEX cannot be trusted, someone still leaves their funds there. There are two types of novices: some learn from the mistakes of others, others from their own. And this cannot be changed; everyone has a choice.

This intellectual laziness that only grows...

We have all been brainwashed that keeping our money , investment and control of our finances in general with centralized bodies are the best decision and we bought into the government lies which is why we're unconsciously draw to trust centralized platforms like exchanges instead of trusting our own ability to safeguard our investment. Non traders prefer exchange because they don't have to take responsibility if anything was to happen to their investment. They prefer to blame others than to blame themselves, this exchanges know this and they make their platforms very easy to use and understandable to gained the trust of the newbies to trust them with their coins.

If you have used any centralized exchange you'll understand why newbies prefer to store their coins on exchanges (which is totally wrong). This exchanges are very user friendly and they have other motivational benefits fo holding coins on their exchange. They have staking and saving features that enables all users that have coins on the exchange eligible to receive reward. The exchange are just manipulating their customers into leaving their coins on their platform but this is absolutely wrong as we should only store coins on wallets that give us full control of our private keys.

This famous intellectual laziness is also linked to what you have just said: the lack of responsibility for decades in all areas. The fear instilled in people so that they no longer take any initiative and that they no longer has any critical spirit. They just do what the majority does.

I still want to add one very important thing: time. Indeed, the cost of living increases, it is often necessary to work more. If you want to raise children, you need money and time. So how, after a day's work, do you find the time when you also have to take care of domestic chores and take care of the children?

Exhausted by such long days, how can you still find the resources to learn?

And I come to the point that seems crucial to me: in almost all societies, it is women who still take care of domestic chores and take care of children, wouldn't this be what makes them less numerous in the cryptosphere? For my part, I used to read a lot at night, after a day's work and after taking care of the house and the children. Physically it is difficult to hold these "double days". Finding time for yourself when you're a mom is not so easy (I'm not talking about wealthy people of course, who have nannies, cleaners, cooks...)

Making sure that people are in debt and have to work until they make a burn out is a clever policy of governments which thus have sheep citizens who, from exhaustion, no longer have the strength to reflect, learn or cultivate their critical spirit.

Finally when some end up being interested in bitcoin despite everything, it will be superficial. A few satoshis on a CEX and that's it. Probably the youngest, without children, will imagine being able to make a fortune quickly (by failing to actually train in trading). They will end up losing their coins on the CEX or being scammed. They are the same ones who lose fortunes in gambling (even if sometimes they have children and are still able to burn the family budget)

[Altryist]

People are not only lazy, they are irresponsible. They prefer that other will take responsibility and duty to manage their life. They store crypto on CEX, they store money in banks, they use path navigator show them, they wait for others to do their work, instead of going home few minutes from school or work - they wait for being picked up, they wait when someone brings them spoon so they can start eating soup, while they can stand up and get that spoon themselves and etc. There are many more example when people wait until others do something, so that they can continue. I dont think that people are lazy, they are used to comfort and situations when others do things instead of them. They keep funds on CEX, but if someone offer help and move funds to their wallet, they would accept that offer without hesitation.

This is a good example, it’s not always about laziness, it depends a lot on habit, if a person is used to always being served a spoon for dinner, then this is normal for him and he will expect that it will always be like this. In addition, not everyone knows how dangerous it is to keep money in a bank, or coins on the exchange, there are those who really believe that the state can take care of their money if they keep it in a bank, the same goes for CEX.

[SquirrelJulietGarden]

Because they are only taught about CEX and how they can be useful in buying and selling their coins, but they were not open on the possibilities that any time of the day, their coins will just vanish like a thin air when everything in CEX gets into troubled or compromised. And that they are closed to the idea that decentralized exchanges also exist, and that they are more reliable when leaving coins even in an indefinite time.

It's not only because they were only taught about CEXs. I am sure there are people who don't know about DEXs so they only know about CEXs and use CEXs. In opposite, there are other people who were taught about both CEXs and DEXs and even more about custodial wallets and self-custodial wallets. With them, it's only their choices to use CEXs and custodial wallets. Because they look for convenience, not for security.

We should not forget that it is never easy for a beginner to understand the basics of privacy provided by the blockchain when his first goal is to make a profit, nothing more.

They surely must learn and practice gradually and I agree with you that it is not terrible if they started with CEXs or custodial wallets. If they can learn and practice better for their security, for their funds and change to use DEXs and self custodial wallets, it is good for them.

[Findingnemo]

On the contrary, I have a question. If expert traders can leavehuge funds on exchange for trading purposes, why new comers cannot leave few dollars?
I am not saying that leaving funds on the exchanges is a good habit but then while choosing an exchange try to chose a reputable one that is not winding up tomorrow, so that you will not kill yourself because you forgot to transfer out your money.
Exchanges should be used as Exchanges and not as a personal wallet.

In reality, there is none we can be entirely sure that an exchange we pick will not suffer a hack overnight but assuming someone is experienced in the crypto space still they are willing to leave the funds on exchange then we can safely assume that they got enough risk appetite but a newbie who just started with something that is only affordable can't afford to make mistakes.

But the knowledge comes with experience and cost if we are unlucky, I was using coinbase for a while for day-to-day transactions because it felt it is cheaper and convenient I moved to Electrum only after I realized it was a mistake. Luckily I didn't lose a dime with the lesson but it can't be the same for everyone.

[coupable]

We should not forget that it is never easy for a beginner to understand the basics of privacy provided by the blockchain when his first goal is to make a profit, nothing more.

They surely must learn and practice gradually and I agree with you that it is not terrible if they started with CEXs or custodial wallets. If they can learn and practice better for their security, for their funds and change to use DEXs and self custodial wallets, it is good for them.

This supports your idea that part of the users are not aware of the existence of decentralized platforms and therefore they perceive that there are no alternatives. The matter can be studied from the other side, as decentralized trading platforms do not promote themselves and do not launch advertising campaigns to introduce themselves in the market. This strengthens the position of the central platforms and makes them almost capture the entire market.
There is no denying the integrity of many service platforms, which helped many to enter the crypto space safely and open the way for them to greater horizons.

[ZAINmalik75]

You have pointed out some good causes from which we all might pass through. For example, I also used to use CEXs and still do. But as you said even I don't have to do trading but still I use CEXs to hold my earnings. One of the reason is, I have to withdraw some money for my daily expenses. So, if I will use any SPV wallet I have to send amount from SPV wallet to CEXs wallet which will cost me around 2$ to 3$ in BTC trade. But will not cost me when I am directly receiving money from someone in my exchange and from there I can easily use it for p2p purposes if I have to.

Other than this, I also prefer to use CEXs to hold some money because sometimes I need other tokens like for transactional purposes I needed some AVX, Matic, etc. So, I save some money in my CEXs. And I know you are not referring to small amounts instead referring to big amounts. Actually CEX provide us at least some security I know it provide no anonymity but security is if enough to save some BTc in it then why going for a Hardware wallet which is also difficult to buy in a country where crypto is ban.

But still people are using CExs because they don't know how to use others. Here comes laziness that you were talking about OP. Overall, we should really migrate to non custodial wallets or hardware wallets if we wanted to save some or more BTc. Because if your don't own the key then you don't own the coin also.

[Distinctin]

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.

Newbies will definitely stick to what they are taught and what they believed in, as they are not still exposed to the real risks when leaving their BTC on CEX. They may have heard it from others, but since they have not felt or experience the risk of losing yet, then it will never convince them to open non custodial wallet instead. But as they go on trading and discover a lot of flaws from CEX, maybe they will start trusting their own non custodial wallet before they will come to experience the risks and start losing all their BTC.