Why are investors more likely to hold Bitcoin in exchange wallets?

[Juicyhome]

I think we should be extremely careful from now on, because with the amount of money the world's best exchange like Binance lost in a short-term attack, there is no guarantee that our hard-earned Bitcoins will not end up in the hands of hackers in an instant. Even though exchange wallets have some advantages, I think we should think long-term and prioritize the security of our investments.

It's crazy no wallet is safe from hackers,  the binance hacking  is a lesson for us to learn from it and stop hold our bitcoin in exchange wallet, it's better to store in in a drive and keep it a a secure place or else it's still risky any one that touches it will steal your bitcoin.  This is the second times binance is experiencing hacking,  is that no site is safe from hackers? Inspite of the millions spend on security features of the site hackers still find a way to access the site.

Have pull all my coins in bybit to my drive I don't want story that touches,  hackers are the most dangerous people on earth,  they can ruin your life within a second once they get access to your site and they can't be trace, crypto transaction is hard to trace the individual involved.  We have to act smart because hackers are not sleeping. Don't hold your bitcoin in an exchange.

[TheButterZone]

So when the exchanges are inevitably hacked or exit-scammed, they can deduct the massive loss on their taxes? 

[Youngrebel]

It's crazy no wallet is safe from hackers,  the binance hacking  is a lesson for us to learn from it and stop hold our bitcoin in exchange wallet, it's better to store in in a drive and keep it a a secure place or else it's still risky any one that touches it will steal your bitcoin.  This is the second times binance is experiencing hacking,  is that no site is safe from hackers? Inspite of the millions spend on security features of the site hackers still find a way to access the site.

Have pull all my coins in bybit to my drive I don't want story that touches,  hackers are the most dangerous people on earth,  they can ruin your life within a second once they get access to your site and they can't be trace, crypto transaction is hard to trace the individual involved.  We have to act smart because hackers are not sleeping. Don't hold your bitcoin in an exchange.

To be honest ehh keeping large amounts of Bitcoin on exchanges is a very very big risk most especially when incidents like this happen, but then i wouldn’t say that no wallet is safe or they is any wallet that is safe but the important thing here is knowing the difference between exchange wallet and personal wallet, this is very very important like me if I move my coins to my personal wallet automatically I have control over my private keys, but am also responsible for protecting them and I treat they with excess care because even a personal wallet can be compromised if someone gets access to your seed phrase or device and am even tired of binance because this is not the first time it has been hacked right from march 2018 till now what’s happening exactly.

[Nothingtodo]

Different central exchanges have been hacked at different times and we have become aware of the evolution of time and also forgotten the memories of the past in the evolution of time. It is said that quite a while ago, Bybit and Bitget exchanges were hacked, then we were aware for a while and then forgot again and we forgot and started keeping our Bitcoin in the exchange wallet again. Binance was hacked a few days ago and we are very aware at the moment but we will not remember this for long, rather we will forget the incident of this hack and start keeping our crypto currency in the exchange again. There will be another major hacking and we will be affected again and forget the memories of the past and start keeping it again and this will continue for ages.

[ZeroVinsonN]

A big reason here may be that investors worry that if they lose their Seed Phrase for some reason, they will never be able to access their Bitcoins again. But on a centralized platform, if they forget their password, they can reset it via email. If they lose 2FA, they can recover it again with the KYC document. Perhaps they take risks thinking about these things. And if the amount is small, they don't worry too much about it. But those who invest in large amounts do not put their funds at risk by using centralized exchanges.

Chances are that most of the BTC in exchanges aren't there because people are holding there but because those people want to trade with it so they hold in an exchange but it's usually short term so they feel the risks are minimal enough to take.
Also exchanges work somehow like conventional banks and people are already used to that so it's easier for them to use (somewhat). We should also keep in mind that no matter how much we say self custody is better there will always be people who don't trust themselves enough to hold their own coin so once a trusted third party offers to hold it for them they simply jump at the opportunity, I say trusted because they are legal.

[Ab de villiers]

Chances are that most of the BTC in exchanges aren't there because people are holding there but because those people want to trade with it so they hold in an exchange but it's usually short term so they feel the risks are minimal enough to take.
Also exchanges work somehow like conventional banks and people are already used to that so it's easier for them to use (somewhat). We should also keep in mind that no matter how much we say self custody is better there will always be people who don't trust themselves enough to hold their own coin so once a trusted third party offers to hold it for them they simply jump at the opportunity, I say trusted because they are legal.

These hacks and scams are  increasing awareness about holding things on exchanges because mostly people feel it's not enough hassle to hold things on exchanges instead of having them in their own custody, where they need to do many things for security and control of their funds. Crypto has enough potential to do as an investor or holder needs to protect its funds, but mostly people do not have enough knowledge about exchanges where things have never worked, as they can do for their own funds. Self custody has also never been easy, but still it gives enough boost to anyone's investment and understanding of risk management, and doing things for safety is always important, never try to compromise with things like these.

[Byebyebtc]

Lazy generation chooses convince over security.

Trusting all your funds and asset with a 3rd party is generally not safe, but individuals seem to ignore that fact, and that shows some levels of carelessness to me. Yes it could be used for trading but when it comes to savings money or long term investment it's not the best choice.

[Wiwo]

Lazy generation chooses convenience over security.

Trusting all your funds and assets with a 3rd party is generally not safe, but individuals seem to ignore that fact, and that shows some levels of carelessness to me. Yes it could be used for trading but when it comes to savings money or long term investment it's not the best choice.

Don't get things twisted, exchange are good custodian of fund's, most especially those that are meant for money activities and movement, so even security wise exchange are secured and could be trusted at least the big exchange.

Most investors have confidence in exchange like Binance and their safu fund's which serve as replacement incase of any hack or other incidents that involved them directly.

Convenience is there but the truth is that exchange user's are not just goinzfor convenience their definitely have other motives behind such a choice.

[abel1337]

It's hard to deny that even with the rampant hacking incidents in these past few years, there are still people who holds their asset on a centralized exchange. There are many reasons for this but I think it is the convinience that matters to them. I myself have some small amounts of bitcoin and stable coin to an exchange since I need to transfer some bitcoin/crypto with ease, since there are times that I want to do a transfer but I only have my phone with me. I only have a relatively small amount of crypto on my exchange account, but to be honest it is really helpful. Especially if I want to do a quick stable coin transfer, I can choose whatever chains are available on the exchange.

We all know that binance got hacked recently and if ever binance commits on their word and not affects their users, there's a high chance that their customer confidence on storing their bitcoin and crypto on binance will increase since they have an assurance from Binance.

But going back, as for me, it's for the convenience though I can only trust a small amount of funds to them. I definitely won't store majority of my bitcoin to binance, like never 

[Rgram]

We have seen this before that some popular exchanges have been hacked, but we have not stopped using exchange wallets for long-term holding from that place. Maybe there are some things that investors always ignore the various risks.

This is just a wide assumption which isn’t all that accurate. It is true that there are those that tends to hold a most of their Bitcoin on exchanges which accounts for some of the high numbers we see in the event of a hack but, it’s very unlikely that informed investors would prefer using exchanges as wallets.
In most cases, it is those that actively trade cryptos on exchanges that prefer to leave some amount of their Bitcoin and other crypto assets on exchanges to avoid having to fund and withdraw before and after every trading session.

Some of the coins that get stolen in these hacks are largely exchange coins as well. Most users on this forum know better than to use exchanges as wallets.

[lombok]

Don't get things twisted, exchange are good custodian of fund's, most especially those that are meant for money activities and movement, so even security wise exchange are secured and could be trusted at least the big exchange.

Most investors have confidence in exchange like Binance and their safu fund's which serve as replacement incase of any hack or other incidents that involved them directly.

Convenience is there but the truth is that exchange user's are not just goinzfor convenience their definitely have other motives behind such a choice.

The selection of large digital asset exchange service is typically made after analyzing protection requirements and financial resources management. The high level of trust in the service provider is ensured by the presence of the emergency reimbursement system which can cope with any technical problems or hacks of the network. Putting funds into centralized systems is obviously not only about the convenience of making operations at any time. There are some particular reasons for doing this, like getting the liquidity of the market, fast execution of orders, and advanced investment opportunities. The management of a cryptocurrency portfolio using this environment demands some additional attention to make sure that all the financial operations yield steady results without risks and not put all the money in one wallet of the third party service provider.

[Primark]

We all know that binance got hacked recently and if ever binance commits on their word and not affects their users, there's a high chance that their customer confidence on storing their bitcoin and crypto on binance will increase since they have an assurance from Binance.

Binance has already compensated most of their customers' assets, which is certainly a positive for them. Even compensating users will increase people's trust in the Binance institution, which I agree with. However, keep in mind that increasing trust does not make it safer to keep Bitcoin on the exchange in the long term. Binance may have been in a financial position to compensate at the moment, which is why they dared to do so. But there is no guarantee that their situation will remain the same if another disaster or, let's say, a similar event occurs in the future. Even when assets are stored on the exchange, the institution usually has final control over the transfer of Bitcoin. Therefore, even if they are willing to return the assets, you may still have to wait if the withdrawal is blocked for some reason.

[snowpega]

Don't get things twisted, exchange are good custodian of fund's, most especially those that are meant for money activities and movement, so even security wise exchange are secured and could be trusted at least the big exchange.

Most investors have confidence in exchange like Binance and their safu fund's which serve as replacement incase of any hack or other incidents that involved them directly.

Convenience is there but the truth is that exchange user's are not just goinzfor convenience their definitely have other motives behind such a choice.

Not all, but only some. If you are the one who really cares about your money, you are not going to rely on centralized exchanges too much. Now, this also varies from condition to condition, like if you are using centralized exchanges just for trading purposes or P2P purposes, then I can say that this is fine. But long-term holding on any centralized exchange is not safe now, even if it is the world's biggest exchange.

For the best of your own security, we need to understand the nuance of this matter: holding long-term funds on centralized exchanges is never a good idea at all, in my point of view. Blindly trusting something can also become a nightmare. So, in such matters, we need to make sure that security comes before anything else in the crypto space for the best survival. What do you think? CMIIW!

[Solokan]

There are several reasons why people store BTC or crypto in exchange wallets, as you mentioned. Storing BTC on an exchange makes it easier to buy and sell. It's true that people often store their BTC on exchanges because they trade frequently However, there are always risks, and crime is common nowadays. The recent hacking incident at Binance requires greater vigilance Fortunately, Binance has taken responsibility for the incident

So, in this case, I think we should be able to store our assets properly Honestly, I personally like to store assets on exchanges, but only for short-term trading. I keep most of my BTC in my wallet Hopefully, incidents like this will make all exchanges more cautious

[TedMosby]

[...]
Perhaps users give more priority to the conveniences, such as when using exchange wallets, there is usually no need to store the Seed Phrase separately, similarly, there is no risk of losing the Seed Phrase, so maybe they consider exchange wallets safe to store their Bitcoin. Similarly, through exchange wallets, buying and selling can be done very easily and there is no need to transfer Bitcoin using a specific address. Maybe considering this overall issue, investors use such exchange wallets to maintain their investments for the long term despite the risks of using exchange wallets.
[...]

Yeah, those could be the reasons. I personally split my own funds between centralized exchanges and self-custody. My main reason for storing crypto on exchanges for the long term is because I find it easier to access, trade, and withdraw to fiat. I don't need to open my external wallet, send it to an exchange, and worry about whether the recipient address is correct

Keeping it on exchanges also gives me extra exposure to yields. Most exchanges offer us small yields, even when we do nothing (like connecting or signing this and that). They do it automatically once we choose to opt in in the beginning.

Another important reason, based on my experience, 3 exchanges I use have been hacked before. But all of them were able to operate normally after the hacks happened. My funds were safe there. That's something that wouldn't happen if my self-custody crypto wallet got hacked.

[KawasakiNinja1_]

Different central exchanges have been hacked at different times and we have become aware of the evolution of time and also forgotten the memories of the past in the evolution of time.

It is wise to learn from this incident of exchange hacking because in the past we have seen that various centralized exchanges are being hacked, but those who are aware and intelligent may have learned from this hacking and are transferring their holdings to non-custodial wallets.

It is said that quite a while ago, Bybit and Bitget exchanges were hacked, then we were aware for a while and then forgot again and we forgot and started keeping our Bitcoin in the exchange wallet again. Binance was hacked a few days ago and we are very aware at the moment but we will not remember this for long, rather we will forget the incident of this hack and start keeping our crypto currency in the exchange again. There will be another major hacking and we will be affected again and forget the memories of the past and start keeping it again and this will continue for ages.

Also note that the bybit exchange was hacked not too long ago last year and about $1.4 billion worth of assets were stolen from it but it is reasonable that fraudsters have stolen crypto assets from Bitgate this year. One of the reasons many are still using these reputable CEXs is that they save on fees for smaller funds,Password recovery facility and ease of use. Retail investors may still opt for these mainly because of smaller portfolio size but I believe those with large holdings keep them in non custodial wallets.

[Fiasem20]

Every bitcoiner has their diverse opinions why they prefer holding their bitcoin in an exchange instead of a wallet.For beginners an exchange is quite friendly to carry out crypto transactions like selling,buying and swapping your bitcoin into a different token.But it’s never encouraged to choose an exchange as a safe space to secure your assets for the long term as it is often known an exchange can go bankrupt or hacked and whenever these circumstances happen it’s likely possible that your holdings might go down because your private keys isn’t managed by you.Another reason why a bitcoiner might prefer dealing with an exchange instead of a wallet is the liquidity,they may not have the patience to wait for their transactions to be confirmed,infact exchange is best for transaction purposes and not a platform for holding huge amounts of coins.

[LOVER BOY 422]

We have seen this before that some popular exchanges have been hacked, but we have not stopped using exchange wallets for long-term holding from that place. Maybe there are some things that investors always ignore the various risks.

Perhaps users give more priority to the conveniences, such as when using exchange wallets, there is usually no need to store the Seed Phrase separately, similarly, there is no risk of losing the Seed Phrase, so maybe they consider exchange wallets safe to store their Bitcoin. Similarly, through exchange wallets, buying and selling can be done very easily and there is no need to transfer Bitcoin using a specific address. Maybe considering this overall issue, investors use such exchange wallets to maintain their investments for the long term despite the risks of using exchange wallets.

I think we should be extremely careful from now on, because with the amount of money the world's best exchange like Binance lost in a short-term attack, there is no guarantee that our hard-earned Bitcoins will not end up in the hands of hackers in an instant. Even though exchange wallets have some advantages, I think we should think long-term and prioritize the security of our investments.

Yes I agree with you, I think you pass a good and warming message to those who are in the system of Bitcoin investment, it's very good to say it very clear, holding your Bitcoin in any exchange is very good but due to some recent attacks I think we all should be very careful of hackers, I will advise we use our sence of belongings this days so that we can be save  today and in nearest future, because what this hackers do is to seat and monitor how to hack the system, I use this medium to still urge bianace to be more secure, so that this kind of huge loss we not happened again.
Yes let me answer this your question many ask this question many hold Bitcoin in exchange because they feel like the Bitcoin is save there , secondly this are sets of investors who has refused to trade because if they should leave it in hot wallet it simply means they are gambling, so they push it to exchange wallet where it will be saved and easy to sell , but due to this hackers now , I think it's not advisable but it's not advisable to sell when someone is not ready to sell

[Jostern]

I think we cannot assume that they hold their Bitcoin on exchanges, I believe that most of the Bitcoin on exchanges is from people who are also actively trading as well. Some may HODL there for the long term but only a small percentage I guess.

But if they hold there they have a reason too as even hardware wallets can be compromised, just like the tampered Ledger hardware wallets, so for people who do not know how to protect their wallets they choose exchanges especially if an exchange has SAFU and has never failed to compensate their clients every time a hack happens (talking about Binance). Both hardware wallets and exchanges have risks it just depends on how the person weighs things up.

There is a chance some investors stores their bitcoin in exchanges, because when the Binance issues started I noticed some close friends who was panicking to withdraw their Bitcoin from Binance exchanges, so I absolutely feel Op is saying the right thing, some investors do neglect doing the right things which is to store their bitcoin investments in a self custody hardware wallet, probably because of ignorance, this little details really matters for the safety of our bitcoin investment for the long term, however I don’t really understand how someone who is investing in bitcoin for the long term would be keeping or storing their bitcoin assets in an exchange which is a very risky thing to do, holders are lucky they were able to get back their money with the effort of Binance, I believe that if it was some common exchange people would have lost their hard earned money through that hack.

[iBaba]

There are several reasons why people store BTC or crypto in exchange wallets, as you mentioned. Storing BTC on an exchange makes it easier to buy and sell. It's true that people often store their BTC on exchanges because they trade frequently However, there are always risks, and crime is common nowadays. The recent hacking incident at Binance requires greater vigilance Fortunately, Binance has taken responsibility for the incident

So, in this case, I think we should be able to store our assets properly Honestly, I personally like to store assets on exchanges, but only for short-term trading. I keep most of my BTC in my wallet Hopefully, incidents like this will make all exchanges more cautious

I think that is a very sensible way to manage your bitcoin, exchanges are useful when you want to trade quickly but I would not be comfortable keeping all my savings there. Because when they are in exchange you never have that full control of your coin.

So keeping the only the amount you want to use for trading and moving the remaining amount to your wallet is the safer approach to me, because even if an exchange has good reputation it is still better not to fully depend on it.