Some crypto exchanges are shutting down, should bitcoin holders be worried?

[Taskford]

If you buy and keep bitcoin on an exchange, you trust them to keep your bitcoin safe and let you withdraw anytime you want to withdraw
But what happens when they shutdown?

I could see that you are not a crypto person, otherwise, you would have known that "Not Your Keys, Not Your Coins." Centralised system is the wrongest place to trust with your money, and it gets worse in crypto environment because they can treat you most unfairly since they can hide under the cover of the internet, as they are weakly regulated. Is that where you want to keep your coins and relax? If at all you want to take that risky step, you should go for the top-rated ones only, but still don't hold big money there.

Everyone who enters this crypto/bitcoin world may still have limited knowledge about it just like all of us on our early days when learning about this thing.
I asked some friends about where they do prefer to store their coins few years back when they were still newbies, most of them answered "exchanges" for various reasons such as:

• 1 place for all which make it simple for them to check/access and they can trade it anytime
• Because of trust, they think that if they store the coins on reputable exchanges, their coins are safe
• Worry of losing private keys if they have to use personal non custodial wallet

• Because of small asset only

I asked them then "how if the exchanges you use shutdown suddenly or get hacked"? Silence for a while (maybe start to think about it).
This is why we need to educate others especially friends/relatives if we think that they are doing something wrong.

This is the problem start because lots of newbies really think that exchange are much convenient to use rather than using non custodial wallets. They are engaging with possible huge risk, since if we look at those past incident and the current one. Those situation indicates that exchange are not really the best platform to use in terms of safe keeping their Bitcoins.

Because they might lost their funds if those platform will suddenly shutdown, get hacked and worst turn scam. So for holding always choose the wallet which they can safe keep their keys. Maybe at start they find it hard and hustle to hide their keys. but later on for sure they would learn lot of things that this is the most efficient way to protect their asset for long time.

[Luzin]

You really don't need to be overly afraid because exchange closures can happen for all sorts of unpredictable reasons. It's not that bad because selection will keep happening—those who can survive and innovate will have more users and trust.  Actually, what people are really worried about in the end is losing their assets. We understand that a few preventive steps can be taken. Don't keep all your assets on an exchange. As long as you control your own private keys, owning Bitcoin doesn't depend on the survival of any one company or exchange.

So the main focus is on assets, where keeping assets on an exchange is prone to loss. So it's better to keep assets in your own hard wallet. Because the password keys on exchanges are not completely secure. We always have to transfer assets from the exchange to a personal wallet to avoid losing them.

[MusaMohamed]

This is the problem start because lots of newbies really think that exchange are much convenient to use rather than using non custodial wallets. They are engaging with possible huge risk, since if we look at those past incident and the current one. Those situation indicates that exchange are not really the best platform to use in terms of safe keeping their Bitcoins.

Each market cycle, each market bull run, there will be many newbies join this market and very first places they start are centralized exchanges. On those platforms, they will have access to only custodial wallets, public address for receiving their deposits or from someone else, but they don't have access to private keys, don't own private keys.

Warnings are abundant, more than enough, for newbies, it's only their responsibility to do enough searching and reading carefully.
Like this warning since FTX and Terra crashes.
Reminder: do not keep your money in online accounts
About four years later, we return to this similar warning after BitMEX and BitMart shutdowns.

[GiftedMAN]

Was there a time that keeping your bitcoin in an exchange have ever been safe ? Some of this exchanges aren’t safe, which is why you should be more cautious where to save your bitcoins, I see exchanges as something that is only meant for traders, and keeping some shitcoins, as an investor who appreciates long term investment you should be more concerned about keeping your bitcoins somewhere that is more safe, where it wouldn’t be possible to loose them through scam or whatever, a non-custodial wallet should be something that you can appreciate to keep your bitcoins investment more secure.

You shouldn't be suprised mate, that account is a newbie account and from his statement i don't think he's well knowledgeable about Bitcoin cause first off he won't be worried about those exchanges shutting down if he's a holder, expect he's trading with any of them. Real investors would never want a third party to have access to their coins and would use wallets that gives them self custody, well from the response he's got i believe he'll learn, i expect him to.

@MainIbem don't be so sure that everyone is knowledgeable about the information that was passed by the newbie some people are still making that mistakes till date though they won't be bold enough to open up since they have been warned about keeping Bitcoin in an exchange so they wouldn't want people to see them as novice. The message is clear people should avoid keeping their funds in an exchange cause not all of them will be good enough to allow you to withdraw your funds if they are shutting down and if there's a little problem linking to where your funds was sent to the exchange they wouldn't be patience enough to investigate they will seize the funds completely.

[Oluwa-btc]

It is the reason why they're called exchanges, they have never been reliable.

The same way bankers do not trust Crypto and new innovations in the financial space is the same way we shouldn't trust exchanges and it also boils down to binance. I don't know why I see too many people flocking binance because of their favorite Cryptobro and influencer CZ. He has been a role model for most of them so they be dick riding about binance forgetting they're still exchanges.

Worry less about it in general. Do the little awareness you can and focus more on being your own bank and taking full responsibility.

[Sally9256]

It is the reason why they're called exchanges, they have never been reliable.

The same way bankers do not trust Crypto and new innovations in the financial space is the same way we shouldn't trust exchanges and it also boils down to binance. I don't know why I see too many people flocking binance because of their favorite Cryptobro and influencer CZ. He has been a role model for most of them so they be dick riding about binance forgetting they're still exchanges.

Worry less about it in general. Do the little awareness you can and focus more on being your own bank and taking full responsibility.

Despite all the past experiences with exchanges people still ignore the risk and store their coins on them, trusting someone else with your coins is risky and it's why centralized exchanges are not to be trusted. People ought to have known that exchanges are not reliable by now.

Exchanges are useful for day to day activities but they can't be trusted fully. No matter how reputable the exchange is we shouldn't trust them to store our coins for the long term, they can only be used to carry out trades and other short term services. Many people see Binance as as an untouchable exchange but it's true an exchange will always be an exchange. It's not difficult to adopt self custody so why risk keeping your coins in the custody of a third party when you can easily avoid unexpected troubles.

[Queentoshi]

This got me thinking about people that keep their bitcoin on exchanges

It is an unacceptable error for an investor in this year to be making with their bitcoin investment, keeping their bitcoins on an exchange even with all the news recently. Any investor still doing that is either just very stubborn and stupid, or the type of investor who is not current with news about bitcoins and their investment because they assume that they are good with just knowing how to buy and sell their bitcoins. There is need to stay on trying to stay current with information and news about your investment even after making your first purchase and a couple of other purchases.

Many people see Binance as as an untouchable

Any exchange, no matter how big can shut down anytime.

[angrybirdy]

If an exchange can disappear anytime, where should we really consider keeping our coin?

I would say exchanges should not be completely eliminated, but their functions should be limited. Exchanges can be used for trading or quick purchases, but non custodial wallets are much more reasonable for long term Bitcoin holding.

Not your keys, not your coins is not just a slogan, but in such a situation its real importance is understood.

That's what I think too... I thinks it's kinda difficult to completely shut down exchanges, They may still continue operating the websites but with limited functions only, such as only allowing users to check crypto prices. However, they are no longer considered a safe place to store our investments and crypto holdings. As what you've said, a  non custodial wallets are much safer for long term holdings of crypto because they also protect us in case the exchange we use gets hacked or encounters other issues. Having this non custodial wallet is very important for us as crypto investors since it is one of the most secure ways to maintain the longterm ownership of Bitcoin and also to lessen our reliance on a third party exchanges, especially when problems like the one we discussed arise.

[rdbase]

Re: Some crypto exchanges are shutting down, should bitcoin holders be worried?

Hey!
There's no relationship between bitcoin hodlers and exchanges. Exchanges are for trading and not for long term storing of bitcoin

I will also appreciate if you look at the reasons the aforementioned exchanges stopped services individually and not wholistically.
Each reason differs and might not be related to the larger crypto market.

Has Binance shutdown? I have some coins there.

Going back in the past when an exchange shutdown it made the price of bitcoin drop significantly. But when these two did nothing happened. I think these things don't affect bitcoin anymore and it just sees it business as usual.
Binance have bought other exchanges out so thinking they will shutdown won't happen without some warning signs.
And have only had those acquisitions so they can operate in other jurisdictions around the globe.

[Cookdata]

This is the problem start because lots of newbies really think that exchange are much convenient to use rather than using non custodial wallets. They are engaging with possible huge risk, since if we look at those past incident and the current one. Those situation indicates that exchange are not really the best platform to use in terms of safe keeping their Bitcoins.

Because they might lost their funds if those platform will suddenly shutdown, get hacked and worst turn scam. So for holding always choose the wallet which they can safe keep their keys. Maybe at start they find it hard and hustle to hide their keys. but later on for sure they would learn lot of things that this is the most efficient way to protect their asset for long time.

We need to stop this attach of newbies on everything, I can tell you that half of people that is here since 2020 or that has experienced one bull run are not just using the exchanges but keep their coins on the exchange which is bad and it's not even newbies, people that are here for long are doing it till now. You can use a centralized exchange for whatever reasons you think will satisfy you but where I draw the line is keeping the coins on the exchanges.

Take a look at the number of pending withdrawals on the Bitmart exchange, you want to tell me that the people that have funds stuck there are newbies. They are same people that are here and have experience some awful disasters from exchanges even if they were not a victim. FTX collapsed is still fresh till date, coins lost are not recovered and the ones people are expecting from the Bankruptcy is taking forever, this can never happen with a self custody.

[tbct_mt2]

Take a look at the number of pending withdrawals on the Bitmart exchange, you want to tell me that the people that have funds stuck there are newbies. They are same people that are here and have experience some awful disasters from exchanges even if they were not a victim. FTX collapsed is still fresh till date, coins lost are not recovered and the ones people are expecting from the Bankruptcy is taking forever, this can never happen with a self custody.

When an exchange is scam exit or closing, it will cause a lot of chaos and you gave good example with FTX exchange. Farther in the past, there was Mt.Gox exchange which we have read many news, even fuds recent years like when their exchange users, also called as victims receive Mt.Gox compensation in Bitcoin distributions.

Since February 2014, now it's more than 14 years and victims still have to wait hopelessly to get their money back, just partially. Such big lesson that is free but ignored by many people and they stepped on same practice as many Mt.Gox victims, storing funds on exchanges.
https://en.wikipedia.org/wiki/Mt._Gox

Not only Mt.Gox, FTX, BitMEX or Bitmart, many exchanges scammed or closed their services with many reasons.
https://www.cryptowisser.com/exchange-graveyard/

[retreat]

If an exchange can disappear anytime, where should we really consider keeping our coin?
Should we leave exchange completely and switch to a non custodial wallet?

From the beginning, Bitcoin was stored not in exchanges, but in self-custody wallets. So, what's the point of questioning something that's already clear? If you store your Bitcoin in a self-custody wallet, then concerns about the exchange's condition don't really affect you, since your Bitcoin remains under your control. Of course, exchanges do offer convenience for users in storing and exchanging their assets. If people are aware of the risks associated with using exchanges, they can simply avoid them and opt for self-custody wallets instead. It's ultimately their choice.

[Hamza2424]

Going back in the past when an exchange shutdown it made the price of bitcoin drop significantly. But when these two did nothing happened. I think these things don't affect bitcoin anymore and it just sees it business as usual.
Binance have bought other exchanges out so thinking they will shutdown won't happen without some warning signs.
And have only had those acquisitions so they can operate in other jurisdictions around the globe.

These two have less liquidity and less number of users compared to Coinbase or Binance, and these two exchanges gave a lot of time to their users to move their funds to a secure place before they shut them down, so this was the reason that nothing happened. Even if they won't have given them enough time, I doubt anything big would happen to the bitcoin market.

Because these exchanges are small, so we should not say these things don't affect bitcoin anymore because they do.

These two exchanges just did not have any effect because they were nothing in front of the bitcoin market. If Binance goes down without even announcing or giving some period to their users, then the market will definitely bleed.

[OgNasty]

I would only be worried if you are using a small exchange and storing funds there.  With massive regulated exchanges existing, there's really no reason to take chances using a fly by night operation.

I participated in a research session with a large exchange this morning.  They are definitely investing heavily in products to bring more users to crypto and I'm sure the exchange market will see a lot of consolidation or failures in the coming months as the market drags along the bottom.

[Sunshine1525]

It is the reason why they're called exchanges, they have never been reliable.

The same way bankers do not trust Crypto and new innovations in the financial space is the same way we shouldn't trust exchanges and it also boils down to binance. I don't know why I see too many people flocking binance because of their favorite Cryptobro and influencer CZ. He has been a role model for most of them so they be dick riding about binance forgetting they're still exchanges.

Worry less about it in general. Do the little awareness you can and focus more on being your own bank and taking full responsibility.

I don't think there's anything relating with holders and exchanges in terms of storing Bitcoin, long term holders should allows go for portfolios that doesn't support third party and most of the exchanges closing gives access to third party so why would holders be worried,  my question is what happens to noncustodial wallets?

Anyone who stores their coin in Binance cause of CZ doesn't value the security of their asset cause same CZ won't give two fucks about them if anything happens to Binance in the future. Bitcoin cause created for self custody so holders shouldn't go against that concept by storing in exchanges.

[Dunamisx]

Bitcoin was not intended to be hold on an exchange platform, instead we are to have our asset on a non-custodial wallet and this is what many don't understand, except if you are into trading and wanted to have your Bitcoin exchange for other related coins on a centralized platform, but it is still important that we know the risk in the use of a centralized platform to hold our Bitcoin, because anything can happen when we don't have full control over it, which is why the use of inon custodial wallet is the best option when it comes to how we hold our assets.