If Your Bitcoin Is on an Exchange, What Can You Actually See on the Blockchain?

[blockman]

This thread is nearing to its almost a month old. And I think that there's a need for OP to edit some for its misspelling like this one;

1.Your balance is not the blachain balance
The 0.05 BTC in your exchange balance does not mean that there is a UTXO out there carrying your name on it. Just like your usual bank app showing ₦400k, This were the exchanges database records the amount their owing you. The Blockchain has no idea of who Mr A is. First lesson

For us, we do recognize that this is blockchain and OP have mistyped it. Although this isn't a big deal but IMO, needs to be corrected. And going through with it, someone can make a joke out of it of how rich they are by showing the exchange's address on the blockchain.

Binance was likely a first CEX did that, after the proposal, then some other top exchanges followed them doing this. Because Proof of Reserve becomes like a mark of trust for centralized exchange customers.

It has given the guarantee that they have the funds ready on them based on how much deposits they have. A good way to verify if an exchange is able to clear all records deposited on them and not just a number on the balances of their users.

[Sammysmart001]

For us, we do recognize that this is blockchain and OP have mistyped it. Although this isn't a big deal but IMO, needs to be corrected. And going through with it, someone can make a joke out of it of how rich they are by showing the exchange's address on the blockchain.

Oops, you’re right about the typo i will correct that now, i do appreciate this pointing out cause most of our beginners can get confused with this most especially when the topic is dealing with understanding what is actually recorded on the blockchain.

It has given the guarantee that they have the funds ready on them based on how much deposits they have.

And on the proof of reserves point, users should understand also that seeing an exchange controlled address holding a huge amount of Bitcoin doesn’t prove by itself that every customer balance are fully backed. Exchange still have to show how this Onchain  holdings relate to its liabilities to customers.

So useful information can be given to users with proof of reserves, but also it shouldn’t be treated as same as having direct ownership of the coins.

[X-ray]

I was not aware of this Merkle root hash feature of Binance, I just looked it up and it exists, but I did not try it because I was not logged in. Can you tell me more about it, like what we can do and what we can't with it? Just hoping maybe your experience can save me some time.

I never checked if my balance was added or not, because the only thing that I know about them is that they own more funds than they manage for customers, so they are never going to be out of funds and that's why they are taking huge risks like cases of money laundering, and MiCA workarounds etc.

Check this article out https://www.binance.com/en/support/faq/detail/815b25f0cb054bdd9d35eccc408fe981, it will give you what kind of information you can get and the process to verify. It's quite lengthy process but worth it if you care about your holding.

You can see roughly some important things related to your account as follows:

Code:

“TotalEquity”: The total value of the user’s holding (in USD); Values is in 10^16
“TotalDebt”: The total value of the user’s borrowing (in USD); Values is in 10^16
“TotalCollateral”: The total value of the user’s holding placed as collateral (in USD); Values is in 10^16
“Assets”: The user’s assets in the snapshot. You can refer to the assets equivalent to the indexes within the asset template list download in step 2 (refer to the “Asset_List.csv” to identify the token by the index). Asset balances are 10^8 except for BTTC, SHIB, LUNC, XEC, WIN, BIDR, SPELL, HOT, DOGE, PEPE, FLOKI, IDRT, BONK, DOGS, 1000SATS and NEIRO (10^2).

Tho, I don't think it's worth going into that process if our account only have less than $1000, it starts making sense to verify ourselves once we held about $5000 and upwards. At the end of the day, it's up to invididual's preference.

[Faisal2202]

Check this article out https://www.binance.com/en/support/faq/detail/815b25f0cb054bdd9d35eccc408fe981, it will give you what kind of information you can get and the process to verify. It's quite lengthy process but worth it if you care about your holding.

You can see roughly some important things related to your account as follows:

Tho, I don't think it's worth going into that process if our account only have less than $1000, it starts making sense to verify ourselves once we held about $5000 and upwards. At the end of the day, it's up to invididual's preference.

This is a great tool to verify your funds, I have been using Binance for some time now, but this is my first time hearing about this feature.

I have 10$ in my Binance for now haha, but I will still give it a chance to see how it works, although it is not important for any kind of claims if it comes to that in the future. I thought I should check, they might deceive later by saying it was important, but it is not. Although that's just the paranoid side of me.

Thanks for sharing it.

[Reid]

In the past, I didn't really understand this, but I made it simple by using the same matrix as they do in banks and digital cash applications.

You see money as a number in those industries. Either in your cellphone or in your computer. But it remains a number until you cash it out. Real cash. That real money that is in circulation unlike what you see in your digital cash application. It can be the same way in Bitcoin.
You put in exchange or a trading website it becomes a number only that is visible to your eye. But once you withdraw it and put it in your hard wallet, that becomes real Bitcoin. It's not just a number anymore, it's Bitcoin.
I think for those who are having trouble understanding this, we must simplify it by using what we experience now in the financial industry.

[tbct_mt2]

In the past, I didn't really understand this, but I made it simple by using the same matrix as they do in banks and digital cash applications.

You see money as a number in those industries. Either in your cellphone or in your computer. But it remains a number until you cash it out. Real cash. That real money that is in circulation unlike what you see in your digital cash application.

It's only safe and as your own money or asset if you cash it out or if you transfer it to buy something or transfer it to someone for something in exchange and the receiver use it for his purposes.

Without using that digital number in your bank account, you can lose it anytime.

It can be the same way in Bitcoin.
You put in exchange or a trading website it becomes a number only that is visible to your eye. But once you withdraw it and put it in your hard wallet, that becomes real Bitcoin. It's not just a number anymore, it's Bitcoin.
I think for those who are having trouble understanding this, we must simplify it by using what we experience now in the financial industry.

It's same with Bitcoin, exactly if people store bitcoin in accounts on centralized exchanges.

They will have risk of losing their bitcoins anytime because without private keys, they can not send coins.
While relying on centralized exchanges is risky, because exchanges are even unsure about their future, not yet about money of customers stored there.

Reminder: do not keep your money in online accounts.

[Webutxo]

You see money as a number in those industries. Either in your cellphone or in your computer. But it remains a number until you cash it out. Real cash. That real money that is in circulation unlike what you see in your digital cash application. It can be the same way in Bitcoin.
You put in exchange or a trading website it becomes a number only that is visible to your eye. But once you withdraw it and put it in your hard wallet, that becomes real Bitcoin. It's not just a number anymore, it's Bitcoin.
I think for those who are having trouble understanding this, we must simplify it by using what we experience now in the financial industry.

Everything on exchange are numbers, it's like their data place manage in their servers. It's when you requested for withdrawal they send money to you, everything remain inside their wallets and they are a automated. They control both hot wallet and cold wallet, but the hit wallet is the busiest of them all, in each blockchain they have coins in there that is why it's dangerous to keep money in exchanges, if anything happen to their wallet, there will be no person to save everyone that have coins there.

I do use exchanges to buy, sell and swap but I have peace of mind more when my coins are off exchanges. The way Mexc was freezing users wallet some days ago makes me rethink the decision. I do have some Bitcoin left anytime I sell some part of my Bitcoin but it made me change completely. They look cool for use until they suspect you of anything, they wouldn't think twice before they block your account.