Pretend that you believe storing btc in an exchange is better than a hard wallet

[HeRetiK]

Most exchanges offer some sort earnings program these days, so earning interest on your coins might be a good reason to store them on exchange. For example those 0.15% you get for BTC on Kraken are totally worth the risk imho (/s)

0.15% APR? That is daily profit of $0.041 if you have $10000 on savings. Which is $15 profit annually. That is not worth it at all.

Most exchanges offer some sort earnings program these days, so earning interest on your coins might be a good reason to store them on exchange. For example those 0.15% you get for BTC on Kraken are totally worth the risk imho (/s)

I don’t see this kind of APR as advantages seriously compared to the risk one will face when this exchanges run into trouble, 0.15% of a $10k worth of bitcoin is $15 mate and just a $100 earning for holding a bitcoin for one year mate, I will rather take off my bitcoin and invest it into other businesses and I guarantee one will get more than that with a bit of custodianship.

Here I was thinking that the /s at the end made it clear that I was being sarcastic

[Minor Miner]

For a change, since most of us here recommend not storing Bitcoin on an exchange because of the "not your keys, not your coins" principle, let's flip the script. Although using a hardware wallet is advised, it’s not 100% foolproof either—sometimes we make mistakes, like our devices getting compromised, often due to user errors.

So, let’s have a little debate to test everyone's knowledge here: defend why we should store our Bitcoin on an exchange instead of a hardware wallet. Enjoy!

There are types of people that aren't tech-friendly, can't take care of their Bitcoin hardware wallet and prefer to use a service that lets them to transfer their duties and responsibilities to 3rd parties. For these people, hardware wallets and non-custodial wallets aren't good options because there is a very high chance that they'll lose their wallet's seed phrases and logically, will not be able to access their wallets. For such people, exchanges are a better option but the problem is that in this case they make themselves dependent on 3rd party, which can block their account and access to fund at any time they wish but the positive side is that when you use 3rd party, you don't have to worry about seed phrases, WIF keys and other problems that comes with traditional wallets.

I have a friend, he understands the concept of custodial wallet and non-custodial wallet very well, he does not deny the benefits of storing bitcoin on non-custodial wallet. But he was not confident in his ability to protect his seed phrase, so he ultimately chose to rely on centralized exchanges.
In fact, there are many people who are not tech-savvy and even not confident in themselves, so obviously using 3rd party services would be the best option for them.

Overall, I find both methods have their own pros and cons and each individual will make their own choice. There is no right or wrong here, it all depends on each person's perspective and preference.

[freedomgo]

Here I was thinking that the /s at the end made it clear that I was being sarcastic

you got him (Zaguru12) good.. so you pretend?  .... what happened to "read between the lines"?

[YUriy1991]

Most exchanges offer some sort earnings program these days, so earning interest on your coins might be a good reason to store them on exchange. For example those 0.15% you get for BTC on Kraken are totally worth the risk imho (/s)

Yes, if I'm not mistaken there are some exchanges that have been browsing offering things like what you said above, even like Feed back up to 1% for any coin if the user wants to move their assets, especially if they deposit the BTC on their platform.

The point is access and security but, For the most convenient option I think assets like BTC are better stored in self-storage rather than involving third parties or institutional storage.

[Rabata]

Choosing a good hardware wallet for Bitcoin security is definitely logical. Moreover, a Bitcoin holder is not safe until he keeps his own assets in any secure wallet. But despite knowing there are many who are keeping their assets in centralized exchange platforms.

A large part of investors like trading and if the assets are placed in any exchange platforms for trading, the traders can get the benefits according to their wishes, but when he transfers it to a hardware wallet, it will create a kind of barrier for him. Many people also think that transaction fees are a big problem. Sometimes they don't get the benefit of using their assets as they want due to the increase in Bitcoin transaction fees but if the assets are kept on an exchange platform then they don't have to think about the transaction fees. Moreover, those who are users of the same exchange can transfer their assets without any charges, which cannot be done in any other wallet.

Considering the above issues, they leave their assets to others instead of keeping it under their own control. As a Bitcoin holder, I feel that unless the assets are held in a secure wallet, those assets will remain at risk. Assets are yours and it is your responsibility to safeguard those assets.

[add1ct3dd]

If we are supposed to talk about positive things about storing our cryptocurrencies in an exchange, then I would go with these few points.

The first point would be that when you have your assets in an exchange, and if it's a trusted and major exchange such as Binance. If your funds get compromised because of a problem in the exchange, then there is a possibility that you might get compensated for that by the exchange because the funds are SAFU, lol .

The second point is that if you are a trader, you won't need to deposit and withdraw your funds every day and avoid paying fees all the time. You will have all your funds at once place, make your trades, get your profits, and repeat that every day without any worries.

[SickDayIn]

I think the reason some people choose to store their cryptocurrency in an exchange and not in a wallet (only considering the scenario of HODLing, not trading), is because of the following beliefs they have:
1. Holding cryptocurrency in my own wallet is risk, and requires technical knowledge.
2. Too afraid I will lose or misplace my 12 word phrase.
3. My exchange is like my bank, and my funds should be insured.

[bubilas]

For a change, since most of us here recommend not storing Bitcoin on an exchange because of the "not your keys, not your coins" principle, let's flip the script. Although using a hardware wallet is advised, it’s not 100% foolproof either—sometimes we make mistakes, like our devices getting compromised, often due to user errors.

So, let’s have a little debate to test everyone's knowledge here: defend why we should store our Bitcoin on an exchange instead of a hardware wallet. Enjoy!

This is a very correct way of thinking - to try to see advantages where at first it seems that there are none. I will not list the disadvantages of keep save  our crypto on exchanges, you already know them.
Wallet on exchanges has many advantages. And for me personally, the main advantage is that I can place pending orders without worrying that if Bitcoin shows a decisive fall or growth, then I will not have time to react and buy it at a price below the market. Also, storage on exchanges has the advantage that a large number of investment instruments are available, including even for stablecoins.

[bubilas]

It's strange that the BNB rate didn't meet the news of CZ's release with explosive growth. But apparently the crypto community, like him, understands perfectly well that Binance will not cease to exist without CZ. He also wrote about it himself. He only gave a start to this, and in the worst case scenario, everything will continue to function. Nevertheless, I'm glad that he got out of prison and maintains a good mood and spirit.
 Cryptans should not sit in prison unless their last name is Bankman XD

[Reatim]

So, let’s have a little debate to test everyone's knowledge here: defend why we should store our Bitcoin on an exchange instead of a hardware wallet. Enjoy!

The most obvious answer here is with an exchange, you can easily access, buy or sell the coins as compared to having it in a hardware wallet. You can’t even buy or sell your coins from a hardware wallet without an exchange. You are still going to need to connect one to the wallet. Why not just use the exchange? 

Another reason is there are far more features useful to someone in an exchange compared to hardware wallets such as staking, futures, spot trading and many more. This allows for more options for investors/traders to earn. Exchanges also allows us to view and be able to analyze different markets easily and in real time.

[Kelward]

defend why we should store our Bitcoin on an exchange instead of a hardware wallet. Enjoy!

The first thing that comes to mind, ignoring all the negatives, is simplicity for the end user. Exchanges handle the technical aspects of security and often provide a user-friendly interface, making it easier for beginners to create accounts. They typically require only a username and password for access, a familiar procedure for most internet users nowadays. In contrast, self-custody and hardware wallets, while quite straightforward in most cases, still require a bit more technical knowledge to set up. Users generally need to install software, connect their device, generate seed keys, write them down, set a PIN and other security measures, make test transactions to verify the process, etc... I think this can be a significant barrier for beginners who lack technical expertise or are unwilling to invest the time in learning new things.

Except for newbies that don't know about none custodial wallets, the reasons you mentioned are basically why a person that understands the risk of leaving their coins in an exchange will still go ahead to do so. Some people are either lazy or they are afraid to hold full custody of their seed phrase, they'll rather leave the responsibility to an exchange. Simplicity of buying and selling your coins through an exchange if you don't have someone to trade p2p with, is a good enough reason for some people to leave their BTC in exchanges. It's ok to leave small amount of coins for short time use in an exchange, aside from that it's better to take full responsibility and keep then in a none custodial wallet because if it's not your keys it's not your coins.

[Pmalek]

I can come with some points but most of them are already talked but still, let's go with it:

1. Exchanges provides an easy way to access and spend your money. In hardware wallet, you always need your device with you.

Everyone has to weigh up the pros and cons themselves. Personally, I see many cons with centralized exchanges and I don't find their pros that useful and attractive. Of course it's easier to log in to a service with a username and password and have access everywhere compared to connecting and unlocking a hardware wallet or using an airgapped wallet. But hey, it's also more comfortable and easier not to wear a helmet on your motorcycle. You don't sweat as much, it's easier to breath, and you can feel the wind in your hair. However, I would rather have my helmet hit the asphalt than my head despite the inconvenience.   

2. Exchanges also offers Earn / Interest schemes over your Crypto, which might be one reason you might want to stick to it.

Some hardware wallets also support staking and earn options. I can only mention Ledger and Trezor, as those are two brands I have often used or still use. I am sure there are more manufacturers that provide earning opportunities to their users.

[Plaguedeath]

I think the reason some people choose to store their cryptocurrency in an exchange and not in a wallet (only considering the scenario of HODLing, not trading), is because of the following beliefs they have:
1. Holding cryptocurrency in my own wallet is risk, and requires technical knowledge.
2. Too afraid I will lose or misplace my 12 word phrase.
3. My exchange is like my bank, and my funds should be insured.

Another reason is profit orientation i.e. staking to earn interest and not paying on-chain fees.

Honestly I'm waiting for the downfall of either Binance or Coinbase, it would a huge turn to most people for owning hardware wallet or they will trauma and not want to touch cryptocurrency anymore.

It would be interesting to see how such situation will happen in the future.

[livingfree]

Because there's an interest given 1%-3% per year for the "stake" Bitcoins on these exchanges.

Compared to us holding that in our hardware wallets or whichever wallet we prefer that has the private keys that we keep, we get no interest and are only dependent to the fluctuations.

That sounds enticing but still a no for me.

That interest part is one thing I think most people use as an excuse to keep their bitcoin in an exchange, but the thing there is that the interest rate is always very small, and it's not always worth the risk.
 
I will rather use day trading as a reason to hold my bitcoin in an exchange since if I focus, there can be more profit, which can be made compared to the APR at the end of the year without also thinking about fees.

If that's the excuse that they use, they're putting their funds into risk.

That's okay, they probably used to that taking of risk and they cannot stop themselves from believing that the money is safe in exchanges and if that's how they use it.

People will only learn so much once they experience the hardship of it. With that, that's what they will about to learn and see.

[dificanovi]

From some information I got, hackers break into centralized exchanges more often than hardware wallets. The following exchanges have been hacked by hackers, namely Bitfinex (2016), Binance (2019), Kukoin (2020). So I prefer to store Bitcoin on a hardware wallet to be safer from hackers.

[Emmanuelex]

I can't pretend that exchanges are better than hardware wallets, because there wouldn't be any points for me to defend that. Although having your coins on the exchange can make trading faster, but that risk is not worth taking, except maybe you don't have much coins to hold, then you can go ahead and leave them on an exchange for easy trading when you want. But if you're the type that has lots of coins, then storing them on an exchange is the worst move you can ever make.

[reagansimms]

The most common reason used by Bitcoin owners who store assets on exchanges is to make it easier when they want to sell or do other activities to avoid the fees that must be paid when moving assets from a hardware wallet to an exchange. Storing assets on an exchange is not recommended because Exchange wallets are not categorized as personal wallets, you cannot do anything with the assets stored in the wallet if something happens, for example when the exchange is closed. However, if the reason is as explained above, it is necessary to consider the amount that can be covered by the risk of loss.

[yhiaali3]

I don't expect anyone in the forum to agree with you about storing Bitcoin on an exchange instead of a hardware wallet, here everyone loves decentralization and hates centralized exchanges.

There is no 100% secure storage method because even the most secure hardware wallets can be damaged, lost, stolen, or the like, but this is nothing compared to the disadvantages of storing your Bitcoin on CEX, suffice to say that you don't actually own anything, what more can I say? This is of course in addition to other disadvantages such as hacking, account freezing, banning, etc.

[FinneysTrueVision]

There are several hypothetical arguments which could be made in favor of storing your Bitcoin on an exchange. If you move around a lot, you could end up misplacing or losing your hardware wallet and the backup phrase. Some people will put their faith in a custodian because they don’t want their funds stolen by untrustworthy relatives living in the same home.

Exchanges like Coinbase have been around for more than a decade. If someone receives Bitcoin and then forgets about it, it is very unlikely they will be able to recover it from a self-custodial wallet 10 years later. If they kept it on Coinbase, all they would have to do is go through KYC to regain access to those funds.

While self-custody is always preferable, we have to consider all the different circumstances that people may encounter. Some people are only interested in the value of their portfolio going up and won’t bother to learn how private keys work. For them, using a centralized exchange is more ideal.

[mich]

Well I do not keep any of my Bitcoin on the exchanges. There was a time when I did stake some crypto on Binance exchange. This is only reason I can see to have coins on the exchange.
But I do not like to worry about if something will happen to my coins. It is just not a good feeling to have when I do go to sleep. For me to know I can access my coins any time is much better feeling to have. Self custody is always the way you should hodl your coins.