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Because it makes it seem like exchanges are not trustworthy places to keep your crypto, and for basic users a lot of people just keep their crypto there. Fear,

Because it makes it seem like exchanges are not trustworthy places to keep your crypto, and for basic users a lot of people just keep their crypto there. Fear, no matter how how misplaced, can cause markets to sway heavily.

trey-jones 9y ago
Exchanges are not a trustworthy place to keep your crypt. I think that is accepted. What does it have to do with the value of the thing?
- tn_ 9y ago
  Bruh if it's accepted then why did people just lose over a half a billion $ storing their cryptocurrency in one.
  - ht85 9y ago
    Why do people drink and drive?
  - sincerely 9y ago
    I don't hold a lot of crypto or anything but one of the most repeated sentiments in communities, guides etc is "don't store money in an exchange". People do it, just like people sometimes buy drugs on DNMs without using PGP encryption, and /usually/ it doesn't end badly for them, but the worst-case scenario (exchange hacked or exit scams and arrest respectively) is pretty bad.
    - vkou 9y ago
      The worst-case scenario of losing access to your personal wallet is pretty bad, too.
- dumbfounder 9y ago
  Imagine you have 2 sets of keys to your house and if you lose both then your house is not yours anymore. That's what keeping your money outside an exchange seems like to me. Exchanges are easy and familiar to people. If there was some secure way to do password recovery that was built into the currency that might be a game changer. That might be impossible by definition, not sure.
  - icebraining 9y ago
    I think you definitively could make something like Keybase on Bitcoin, by using multiple third-party institutions (chosen by the user) as a fallback. When sending coins to your storage address, you'd say "anyone can use this money if they have this private key OR if they get a digitally-signed certificate from 3 out of 4 of these keys (A, B, C, D)". Those keys could belong to different institutions (or persons) that would declare they vouch for your identity. Then if you lost your key, you'd go to each of them to get your certificate signed and could then use the coins again. -- Of course, this means that if those institutions colluded, or all got hacked, you could still lose your coins, but it'd be harder than just keeping them in an exchange.
    - KMag 9y ago
      Too bad Bitcoin uses ECDSA instead of Ed25519 (or any other signature algorithm supporting threshold signatures). With threshold signatures, you don't even need something in the wallet saying "any N of the following M", you could just give secret shares to those M parties, and any N of them could collaborate to sign something using your single public key.
      - glitch003 9y ago
        You could just do that anyway by running Shamir's Secret Sharing Scheme on a Bitcoin private key, splitting the key into M parts where any N of M parts can be combined to recover the original private key.
        9y ago
- Obi_Juan_Kenobi 9y ago
  I can't believe this is downvoted; this has been a mantra in the cryptocurrency community for years. If you don't control your private keys, you don't control the coin. Traders take a risk in putting funds, fiat or otherwise, on an exchange. Many use domestic exchanges that have higher fees in an attempt to mitigate this risk. They are all well aware, but see the reward to be worth it.

trey-jones 9y ago

Exchanges are not a trustworthy place to keep your crypt. I think that is accepted. What does it have to do with the value of the thing?

tn_ 9y ago
Bruh if it's accepted then why did people just lose over a half a billion $ storing their cryptocurrency in one.
- ht85 9y ago
  Why do people drink and drive?
- sincerely 9y ago
  I don't hold a lot of crypto or anything but one of the most repeated sentiments in communities, guides etc is "don't store money in an exchange". People do it, just like people sometimes buy drugs on DNMs without using PGP encryption, and /usually/ it doesn't end badly for them, but the worst-case scenario (exchange hacked or exit scams and arrest respectively) is pretty bad.
  - vkou 9y ago
    The worst-case scenario of losing access to your personal wallet is pretty bad, too.
dumbfounder 9y ago
Imagine you have 2 sets of keys to your house and if you lose both then your house is not yours anymore. That's what keeping your money outside an exchange seems like to me. Exchanges are easy and familiar to people. If there was some secure way to do password recovery that was built into the currency that might be a game changer. That might be impossible by definition, not sure.
- icebraining 9y ago
  I think you definitively could make something like Keybase on Bitcoin, by using multiple third-party institutions (chosen by the user) as a fallback. When sending coins to your storage address, you'd say "anyone can use this money if they have this private key OR if they get a digitally-signed certificate from 3 out of 4 of these keys (A, B, C, D)". Those keys could belong to different institutions (or persons) that would declare they vouch for your identity. Then if you lost your key, you'd go to each of them to get your certificate signed and could then use the coins again. -- Of course, this means that if those institutions colluded, or all got hacked, you could still lose your coins, but it'd be harder than just keeping them in an exchange.
  - KMag 9y ago
    Too bad Bitcoin uses ECDSA instead of Ed25519 (or any other signature algorithm supporting threshold signatures). With threshold signatures, you don't even need something in the wallet saying "any N of the following M", you could just give secret shares to those M parties, and any N of them could collaborate to sign something using your single public key.
    - glitch003 9y ago
      You could just do that anyway by running Shamir's Secret Sharing Scheme on a Bitcoin private key, splitting the key into M parts where any N of M parts can be combined to recover the original private key.
      - 9y ago
Obi_Juan_Kenobi 9y ago
I can't believe this is downvoted; this has been a mantra in the cryptocurrency community for years. If you don't control your private keys, you don't control the coin. Traders take a risk in putting funds, fiat or otherwise, on an exchange. Many use domestic exchanges that have higher fees in an attempt to mitigate this risk. They are all well aware, but see the reward to be worth it.