"Funds are SAFU": Here we go again, but with Coinbase!

[NotATether]

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet.

i will never understand why a crypto exchange doesnt utilise crypto techniques of database/ledgers, to avoid such glitches
im not saying full on private blockchains for user database.. but at least some of the crypto techniques to preserve data

heck even decades ago "clouds" were suppose to be the answer to database glitches by decentralising the database so if one database is lost/glitched,  they can pull a copy instantly from another source as if the problem never happened/went unnoticed to customers

You know why the cloud seems to be almost as brittle as Dave's production server? It's because all it takes to take down the infrastructure is just one bad line of code. That's it.

When everything else crashes because of that, chaos ensues. This really hasn't changed over the last 20 years. It's pretty much a fact of life that people always create bugs in their code.

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[Fiatless]

It no sense, because a software wallet like Electrum isn't something you lave to take lessons on how to use like it's a university course, it is literally just a software program like Google Chrome, VLC, and Adobe Reader.

Do you take lessons or tutorials to use any of those? Of course not. That is because they are intuitive to use. The same goes with wallet software. Except for full nodes but those are not included in this discussion.

There are even convenient non-custodial mobile wallets such as Trust Wallet, and Coinbase Wallet (LOL) which you can access by opening an app. There is literally no excuse for normal people to go to an exchange website and sign in in order to access your coins.

These wallets are very easy to use even for a semi-illiterate. You will be surprised to know that most people don't even know that wallets exist. They assume that exchanges are the only means of keeping and trading cryptocurrencies. Some of them joined the crypto space because they want to make quick money so they are now concerned about learning anything about the sector.

Money in exchanges is relatively safe; if they were as unsafe as people here portray them to be, no one would use them. In the meantime, billions of dollars worth of volume are transacted on Binance every day. I'm not recommending storing in exchanges, but sometimes it's necessary because people are actively using their funds.

This was how people felt that exchanges like FTX were solid and safe until the unexpected happened. Using exchange from trading is not wrong but keeping large sums in them is not safe.

[NotATether]

Money in exchanges is relatively safe; if they were as unsafe as people here portray them to be, no one would use them. In the meantime, billions of dollars worth of volume are transacted on Binance every day. I'm not recommending storing in exchanges, but sometimes it's necessary because people are actively using their funds.

This was how people felt that exchanges like FTX were solid and safe until the unexpected happened. Using exchange from trading is not wrong but keeping large sums in them is not safe.

It is baffling that people still keep their entire balance inside exchanges after what happened to FTX. Like it was so bad, it was even publicized everywhere - and not just in the Scam Accusations or Exchanges section of the board by the way - but all over the news, and even the government, newspapers, and TV got on it, and the founder is now doing jail time.

It is like these people somehow expect that the exchanges will stop them from getting scammed by returning the money to their account like a bank.

[Ultegra134]

It is baffling that people still keep their entire balance inside exchanges after what happened to FTX. Like it was so bad, it was even publicized everywhere - and not just in the Scam Accusations or Exchanges section of the board by the way - but all over the news, and even the government, newspapers, and TV got on it, and the founder is now doing jail time.

It is like these people somehow expect that the exchanges will stop them from getting scammed by returning the money to their account like a bank.

I also have a decent amount of money on Binance due to Launchpool projects that I'm taking advantage of, but certainly not my entire balance; I keep my Bitcoin in a separate wallet, away from exchanges. However, although history has proven that incidents such as FTX occur (see Mt. Gox exchange and possibly others as well), my question is: how do whales trust them and keep balances worth millions stored in them? I've seen multiple sales of hundreds of dollars worth of cryptocurrency on Binance and other exchanges in real time, and honestly, it's an every-day phenomenon.

How do you respond and how do you explain this?

Edit: Right now, as we speak, there are Bitcoin transactions of over $300,000 on Binance, in a single transaction or over $1,000,000 trading stablecoins (see FDUSD/USDT), which means that there are people with a great sum of money stored on the exchange.

[pakhitheboss]

This is more about an exchange which is Coinbase. This topic is better to be on exchange board.

It is not about exchange it is about the panic the exchange created as Bitcoin soared to $64000, which is why this topic is relevant to the Bitcoin board. If it was absolutely about an exchange glitch then I would have agreed with your reasoning. The glitch happened as a lot of users were trying to sell Bitcoin which is the reason why the Coinbase website and its app were not able to handle the traffic and users panicked more when they saw zero balance which caused them to halt all transactions of Bitcoin for a brief period.

[Plaguedeath]

I also have a decent amount of money on Binance due to Launchpool projects that I'm taking advantage of, but certainly not my entire balance; I keep my Bitcoin in a separate wallet, away from exchanges. However, although history has proven that incidents such as FTX occur (see Mt. Gox exchange and possibly others as well), my question is: how do whales trust them and keep balances worth millions stored in them? I've seen multiple sales of hundreds of dollars worth of cryptocurrency on Binance and other exchanges in real time, and honestly, it's an every-day phenomenon.

How do you respond and how do you explain this?

Edit: Right now, as we speak, there are Bitcoin transactions of over $300,000 on Binance, in a single transaction or over $1,000,000 trading stablecoins (see FDUSD/USDT), which means that there are people with a great sum of money stored on the exchange.

It's because most of Bitcoin holders are know or interested with Bitcoin in 2017/2018 during Altcoins season and Bitcoin price able to reach $19K, it's a big milestone at that times. Mt.Gox was a biggest exchange during early days, but in 2014 they gets hacked and they're bankrupt. Most people not aware with this case, since they're know Bitcoin in 2017, it makes them always think Binance is the first, popular and biggest exchange, since they still exist until now, there's no problem to hold the coins on Binance.

So we're need to wait when Binance become Mt.Gox 2.0, I'm sure we will see a chaos.

[martinex]

A sad incident, it is appropriate for coins like BTC to be in private places and not in public places like on exchanges. Like what happened to this person whose balance was drained even though confirmation had been made. But, interestingly, is this purely the fault of user Abdullah Ghaffar @ihustlebro or a technical error from the exchange itself in my opinion would be very interesting to watch until the end.

[LoyceMobile]

If they only trade and don't want their own wallet, shouldn't they move to an ETF instead?

[JollyGood]

We all know the motto: not your keys, not your coins.

It is understandable that many people would not be in a position to download the whole blockchain but at the very least they could use Electrum in order to be sole users of their wallet. If investors do not have sole access to their crypto, it means any of the other parties that have access to them could effectively steal them (or be responsible for them being taken if there was a security lapse). Thankfully that did not happen in the case with Coinbase.

People who are not trading coins do not need to use an exchange. It is just ridiculous seeing people on X/Twitter having a mental breakdown over this even after hearing about "not your keys, not your coins" so many times.

[thecodebear]

Panicking Coinbase users woke up today to find their bitcoin balances at $0 because of a technical glitch.

Source: https://www.msn.com/en-us/money/markets/bitcoin-s-price-surge-briefly-broke-coinbase/ar-BB1j4tNN

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet. People who are not trading coins do not need to use an exchange. It is just ridiculous seeing people on X/Twitter having a mental breakdown over this even after hearing about "not your keys, not your coins" so many times.

Anyone who has used Coinbase for a long time should be used to this. There was no reason to freak out. During huge spikes in traffic when Coinbase starts not working well it is fairly common for balances to show as zero. I guess whatever API calls retrieve balance data tend to get not get through during super high traffic periods. I've noticed it several times in the past, its just annoying because it pretty much always happens on quick crashes and so it makes it so ya can't put in any trades on the crash. So when I saw my Coinbase balance at zero for a bit yesterday I was just like okay normal overflowing traffic conditions.

It's not being lucky, just a pretty typical thing that breaks when Coinbase can't handle to traffic load.

I'm sure most people who were freaking out do some trading, which is why they keep money on an exchange. And if you trade and you don't realize this is a normal thing that happens when Coinbase suffers extreme traffic, yeah of course you're gonna freak out about all your trading funds disappearing.

As far as I'm aware Coinbase has never been hacked, and has pretty much always been the safest crypto exchange. Which is why they can get away with higher trading fees than most exchanges, because they've earned people's trust over many years in an industry rife with hacks, and for traders you HAVE to keep money on an exchange so Coinbase is the safest place for traders. So anytime Coinbase is acting wonky and not showing things right its a pretty safe assumption its just temporarily glitching due to traffic overload. It would be nice after so many years of these sorts of things happening if they had figured out how to immediately scale up their servers to handle those times when traffic goes vertical, but I guess they aren't able to do it to the degree needed.

[MFahad]

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet. People who are not trading coins do not need to use an exchange. It is just ridiculous seeing people on X/Twitter having a mental breakdown over this even after hearing about "not your keys, not your coins" so many times.

For some unknown reason, some people find exchanges to be safer than online wallets or even non-custodial wallets because I have seen a lot of people keeping their assets in exchanges even the ones that are kept idle and are being held, it is understandable if a person is using the assets kept in an exchange for usual trading activities because they can't withdraw and deposit the funds every day, but why keep idle assets in an exchange?
To be honest, I would also freak out if I'm keeping all my Bitcoins in an exchange and when I wake up in the morning some day and find out that I have nothing in my account. Even if it's a glitch, at least you wouldn't know at first until you see some news or Tweet or something about it.

[thecodebear]

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet. People who are not trading coins do not need to use an exchange. It is just ridiculous seeing people on X/Twitter having a mental breakdown over this even after hearing about "not your keys, not your coins" so many times.

For some unknown reason, some people find exchanges to be safer than online wallets or even non-custodial wallets because I have seen a lot of people keeping their assets in exchanges even the ones that are kept idle and are being held, it is understandable if a person is using the assets kept in an exchange for usual trading activities because they can't withdraw and deposit the funds every day, but why keep idle assets in an exchange?
To be honest, I would also freak out if I'm keeping all my Bitcoins in an exchange and when I wake up in the morning some day and find out that I have nothing in my account. Even if it's a glitch, at least you wouldn't know at first until you see some news or Tweet or something about it.

Well lots of people aren't tech savvy but just heard Bitcoin is a good investment and don't feel like learning how to get their bitcoin off-exchange. Heck, I'm sure a lot of people don't even know enough about Bitcoin to know that you can take it off-exchange. My mom, who owns some Bitcoin back from 2017, occasionally freaks out about not having access to my Bitcoin because "what if I got in an accident and was unconscious had to use that money to pay for the hospital" haha. So occasionally she brings up the idea of me giving her access to my Bitcoin. And a couple years ago after I once again said no, she was like its okay if you are in a coma or something we can just make coinbase give us access. I was like ummm wtf you think I keep my bitcoin on Coinbase?! I was like of course I hold it all myself. Her response literally was, "how is that possible?". This was like 5 years after she bought Bitcoin, with a son who is all in on Bitcoin and retired early thanks to Bitcoin, and she didn't even know bitcoin is any different than say owning cash in a bank or like owning stock through a brokerage firm.

So while a lot of people definitely just don't want to bother learning how to hold bitcoin themselves, or don't want the responsibility of that and they trust the exchange company to do it for them, I'm sure a lot of people who have bitcoin don't have any clue what it is besides an investment and don't even realize you can take it off an exchange.

[Z-tight]

A sad incident, it is appropriate for coins like BTC to be in private places and not in public places like on exchanges.

It is appropriate for BTC to be stored in self custodial wallets and not in custodial wallets like exchange wallets.

Like what happened to this person whose balance was drained even though confirmation had been made.

In this incident their coins was not drained out of their wallets, it was a glitch that affected the exchange and displayed customers' balance as zero, even when they had funds in the exchange. Though nobody lost coins through this incident, but it is a warning that not your keys, not your coins.

[coolcoinz]

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet. People who are not trading coins do not need to use an exchange.

There are many reasons for that.

They don't trust bitcoin, think they'll be able to sell fast in case of crash if they have money on exchange.
They treat exchanges like banks and trust them the way they trust banks
They're afraid their homes aren't safe and don't believe in their ability to protect coins, which isn't that weird if you think about it. Many people in poor countries don't own computers. All they have is a phone and phones get stolen or lost, so they prefer to use a popular exchange.

[DooMAD]

If a glitch causes customer balance to become zero, then I am afraid that more serious technical problems could make people lose all they have in these exchanges.

It was just a visual glitch; their balance didn't suddenly disappear. I believe that you're overexaggerating

Regardless of the severity of the glitch, or whether or not people are blowing it out of proportion, the question remains one of 'trust'.  Bitcoin was designed so that you don't need to rely on trust.  

However, all Coinbase users are choosing to rely on trust.  Each and every one of them, whether they realise it or not, is accepting that someone else is responsible for "their" balance (except it's not actually theirs).  This is precisely the thing that usually happens when you trust others.  As such, these are the consequences of their choices.  Coinbase users must live with the mistakes Coinbase make.  It's what they signed up for.  

Maybe this time was just a visual glitch.  But next time could be something more serious.  No custodian is immune to hacks, staff error, regulatory confiscation, etc.  Sooner or later, these things are going to happen and funds will be lost.  It's inevitable.  And if people can't reconcile that fact, stop trusting custodians.  Simple.

[Potato Chips]

my question is: how do whales trust them and keep balances worth millions stored in them? I've seen multiple sales of hundreds of dollars worth of cryptocurrency on Binance and other exchanges in real time, and honestly, it's an every-day phenomenon.

How do you respond and how do you explain this?

Edit: Right now, as we speak, there are Bitcoin transactions of over $300,000 on Binance, in a single transaction or over $1,000,000 trading stablecoins (see FDUSD/USDT), which means that there are people with a great sum of money stored on the exchange.

I don't get the reasoning. They're not some sort of role models we ought to follow. In fact, the term says nothing about how much they care about their security.

But to be fair, high volume traders (not necessarily a whale) don't have much choice because privacy oriented exchanges won't be able to handle their volume. I would say actual whales are more likely to go for OTC/private deals but yeah it doesn't mean there are no high volume trades on spot.

There's also a difference between keeping coins on exchange and just using it to trade so it's hard to say whether 'all' of these fellas are using the exchange as their long term storage.

[Darker45]

Unfortunately, that's the convenient way and people love convenience. As a matter of fact, that seems to be their priority. If privacy and safety come with a hassle while trusting a third party is convenient, they would readily choose the latter.

Also, many people who are into Bitcoin, even knowledgeable ones, haven't actually gone into the Bitcoin rabbit hole. Their participation is superficial. That's why they easily recommend the likes of Coinbase and Binance and other custodial wallets that are popular. They're clueless. The danger is that some of them are influential and people would follow them.  

[goldkingcoiner]

Panicking Coinbase users woke up today to find their bitcoin balances at $0 because of a technical glitch.

Source: https://www.msn.com/en-us/money/markets/bitcoin-s-price-surge-briefly-broke-coinbase/ar-BB1j4tNN

Well at least they were lucky that it was just a glitch! I will never understand why normal people are keeping their coins in an exchange and not even in a software wallet. People who are not trading coins do not need to use an exchange. It is just ridiculous seeing people on X/Twitter having a mental breakdown over this even after hearing about "not your keys, not your coins" so many times.

Funds are never safu on centralized platforms like cryptocurrency exchanges. CEXes are just bombs waiting to explode. Anyone who holds his/her Bitcoin on such a centralized exchange (or a custodial/closed source wallet) does not deserve to own Bitcoin. I have never liked the whole concept of re-centralizing decentralized money. That way it basically becomes a CBDC but with extra steps.  

And I would take anything exchanges tell me with a grain of salt. They are all criminals, or worse, crappy coders.

Not your keys, not your coins. I am always happy to see that phrase.  

[GreatArkansas]

At first, when we deposit our funds to this kind of centralized exchange, we already don't own our cryptocurrencies, what we only hold is the number saved to their database.
About this question, for sure they have some technical issues and do not lose their cryptocurrencies.

[YUriy1991]

If they only trade and don't want their own wallet, shouldn't they move to an ETF instead?

Correct. The problem occurs when many people want to sell Bitcoin when the price is high but don't want to bother with the rising price movement of BTC, in my opinion it's exactly as you said above, it's better to join an ETF and don't worry about protecting our own wallet and have to do very technical things, But what @NotATether said is also very true because it is often talked about and the importance of controlling your own coins without relying on exchanges.