What Really Happens to Your Bitcoin After You Deposit It on an Exchange.

[God Tim]

When many individuals use a Bitcoin exchange they usually think buy and sell Bitcoin however there is a lot going on behind the since knowing how an exchange work can help users have better knowledge and avoid dangerous actions.
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‎1 Liquidity
‎Means how to easily Bitcoin can be sold without making a large change in its price exchange usually have on order book containing buy and sell order
‎An exchange with good liquidity can normally process big trade with loss price impacts on the next hand low liquidity can result in wider spread and big slippage.
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‎2 Kyc
‎Kyc mean knowing your customer many centralized exchange machines user to give information like the name, identity document and sometimes proof of address Kyc is connected to regulatory measures fraud security and anti money laundering procedures.
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‎3 Bitcoin with drawls
‎When you buy Bitcoin on an exchange you may see a Bitcoin balance in your account that does not really mean that the exchange has made a difference on chain transaction for you immediately
‎When you know a withdrawal process the plea and then sends Bitcoin to the address you have the transaction is then spread to Bitcoin network and processing time can vary depending on exchange and network current state

[BIT-BENDER]

First my brother use pidgin, you dey free to use pidgin for this board, I no go lie you but the post was hard to read and your message will be hard to grasp especially on the last point you made.
I will encourage you to go back again, read it, make the right corrections, use pidgin if you have to make we follow understand wetin you dey try pass.

[Doan9269]

The moment you identify yourself as someone who uses centralized exchanges, know that you are no longer in control of your assets, and there is no difference from someone who uses commercial Banks, because you will be regulated.

Everything that comes with the challenges of using custodial storage will also affect you in one way or the other. This will also mean that there is no difference between how you have been using banks and how you use crypto as a result of using a centralized exchange, except if you decide to use a decentralized one or have a non-custodial wallet

[devouring-DARKNESS]

First my brother use pidgin, you dey free to use pidgin for this board, I no go lie you but the post was hard to read and your message will be hard to grasp especially on the last point you made.
I will encourage you to go back again, read it, make the right corrections, use pidgin if you have to make we follow understand wetin you dey try pass.

And you think it would have been any different if God Tim had used pidgin? I don't think so, since you didn't understand what was written which is understandable because it wasn't an easy read, you could have just said you didn't understand what was written rather the using it as an avenue to push pidgin, make u sha know say no be everybody sabi write with pidgin, echo bad make person dey make mistake for correct English then you force am to speak pidgin e come still butcher that one too.

[promise444c5]

Well, most of what you listed isn’t related to what they actually do with it… and as a matter of fact, nobody really cares about what CEX do with it other than “not your keys not your coin”.

All you need to know is, once you deposit the Bitcoin(s) then it is no longer yours  until you request for a withdrawal and eventually get those Bitcoins back on a wallet you own the keys.  During the period is stays with them, they can do whatever they want with your coins including the ones you can personally opt in for .

[Ishicryptic]

Once you send your Bitcoin into your CEX account it still remains Bitcoin, nothing changes in that regard and if Bitcoin price fluctuates while it is in your exchange account it will show you it's current price. What actually changes when you send Bitcoin from your none custodial wallet into your exchange account is that you have lost a total control over your Bitcoin because the narrative of "not your keys not your coins" will apply to you. So your Bitcoin doesn't transform into a centralized digital currency, it still remains decentralized even in the custody of an exchange but you the owner doesn't hold the keys to your coins. A big exchange like Bitget recently got hacked, if they were to shutdown as a result of it or go bankrupt there is nothing you can do about your Bitcoin in their custody except to hope that they will recover and somehow release your coins.

[Nathrixxx]

The moment you deposited your coin on an exchange, then it is no longer at your own jurisdiction to know or determine how they are going to engage using it for their own benefits, that being said, you also stand the risk of losing it completely to them if anything happen unexpectedly with the exchange, as you don't have the private keys with you and the exchange will not bear full responsibility should in case of any hack or loss of asset in case the experience anyone or it hacked, so why should we now and trust our asset with them when they can still use it to run their own business and make more profit.

[CryptoHeadlineNews]

When many individuals use a Bitcoin exchange they usually think buy and sell Bitcoin however there is a lot going on behind the since knowing how an exchange work can help users have better knowledge and avoid dangerous actions.

What really happens once you deposit your Bitcoin on an exchange is the fact that automatically the exchange have full control over your Bitcoin, whereby it can either trade with it, lend it to other users for an interest, or possibly just keep the Bitcoin on the exchange's central internal wallet where they have full control over it. Because the moment you deposit Bitcoin on a crypto exchange, then you are indirectly putting the exchange to have full control over your bitcoin. Including having full knowledge over your personal information, which is where KYC comes into play, as a means to prevent exchange fraud. 

[Mia Chloe]

~snip

Fun fact is Centralized exchanges are kinda more popular than open source bitcoin only wallet that promote decentralization. Most of these open source wallets rely totally on community support and funding so they barely get recognised unlike their centralized counterparts that spend alot on visibility and marketing.

Anyways take note that exchanges most times don't really treat your deposits the way you'll  expect coins going in and out of a non-custodial wallet works. Besides you can see that if you check the transaction history via explorers.

[Franctoshi]

Going by the title of this thread, are you encouraging Bitcoin storage in an exchange or discouraging it?

The very first thing that happens to your Bitcoin once it hits any exchange is that it's no longer in your control; you've lost total control of that Bitcoin because the exchange can decide to freeze it or request KYC or proof of funds in some cases where it's a large amount of money. It's then you would understand that,” Not your keys, not your crypto” especially when you failed to comply with their rules of using their exchange.

They can do anything with that crypto, inasmuch as much as it remains in their wallet; you can't even use their P2P without verification. These are a few things that are quite taking note of if you're a newbie depositing money on any "centralised exchange".

[ZeroVinsonN]

Going by the title of this thread, are you encouraging Bitcoin storage in an exchange or discouraging it?

The title of the thread doesn't give any context on it's own as to which side OP is picking, reading the rest of the post will tell you what you want to know, at the very least the title wasn't misleading, not to me at least.

Sometimes we tell people that keeping their bitcoin in an exchange or a centralized wallet isn't safe since they are basically handing over control of their bitcoin to a third party but recently I've come to realize that some people do this intentionally. Not everyone out there wants to be responsible for their bitcoin, long story short, they don't trust themselves enough to hold it themselves and while I do not support them for that I can't lie that I don't see the reasoning behind it, if they can trust banks to hold their money why not a centralized wallet, the only major risk there is hacking but these days even decentralized wallets somehow get hacked.

[SDS11]

The moment you identify yourself as someone who uses centralized exchanges, know that you are no longer in control of your assets, and there is no difference from someone who uses commercial Banks, because you will be regulated.

Everything that comes with the challenges of using custodial storage will also affect you in one way or the other. This will also mean that there is no difference between how you have been using banks and how you use crypto as a result of using a centralized exchange, except if you decide to use a decentralized one or have a non-custodial wallet

You are right but make I add small correction.  Yes, CEX means you are not fully in control, not your keys, not your coins. We know that one and yes, they will regulate you, freeze you, ask for KYC like banks.
But to say there is no difference between CEX and bank is not 100% correct. There is a small difference. With CEX, you can still move 10 million naira worth of USDT in 2 minutes on a Sunday night to someone in Canada. Bank cannot do that . CEX still gives you access to global liquidity, to P2P to trading opportunities that bank will never give you.
So, CEX is like half freedom while Bank is full of captivity. Decentralized exchange and non custodial wallet is full freedom. The best strategy for smart trader be this: Use CEX to trade and make your profit but don’t leaoyour life savings there. Once you make money, move some of the money to your non custodial  wallet. That way you go enjoy the convenience of CEX but still keep the true spirit of crypto sef custody. So make we no condemn CEX we need am but we should know the risk.

[Frankolala]

I no see any connection with your topic and wetin you dey tell us because e get wetin I dey expect to read wey you no write and na e be say, the moment wey you deposite your bitcoin for exchange, you don give them opportunity to dey in charge of your bitcoin because no you get the private keys again na the exchange own and them go do anything wey them like with your bitcoin.

Them fit choose not to give you back again. Them even fit just shut down carry all una money run or one bad hacker somewhere, fit don dey try how to hack the exchange since, to thief their money make e be say na that time e come work out for am. He go hack the exchange thief una money. If the exchange judst dey lie say them get SAFU and them no get, if na big money them thief wey fit run down the exchange, na so them go take pack up, your money don loss be that. Only put money wey you won use sharperly for exchange and after you finsih withdraw back to your own personal wallet.

[Doan9269]

Maybe if we all know what the centralized exchanges are doing with our Bitcoin when we deposit it on their platform, then almost everyone will try to avoid using them for any reason and embrace decentralization, because the best way to hold our asset is in a non-custodial wallet and not in custodial storage.

We also have to let people know this, because all they need is to understand the Bitcoin network and these most secure ways they can hold their assets without taking the risk of losing them to a third-party platform or centralized exchange.

[Sammye3]

Depositing bitcoin on a centralized exchange means you do not have control over the private keys and the exchange could freeze your account on the event of any suspicious activities. When the assets remains on bitcoin without conversion to a stable coin, there would be fluctuations with bitcoin's volatility and the quantity could drop as bitcoin drops.

With the KYC verification, it is important to provide such information for the exchange to improve security and unlock trading activities on some exchange, that would serve as a security measure in the case of a wallet breach.