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Why do people trust middlemen to handle their crypto in a safe manner? The whole idea behind crypto is that it's decentralized. Interacting with exchanges, inve

Why do people trust middlemen to handle their crypto in a safe manner? The whole idea behind crypto is that it's decentralized. Interacting with exchanges, investment platforms, etc is asking for trouble. Assume any exchange is another MtGox waiting to happen. Assume you no longer own your funds once you interact with any crypto platform. Fraud is rampant in the crypto scene and has been since the beginning. And for those crying 'But Coinbase!'. I don't trust them either. Coinbase must have a really hard time sleeping knowing they're the custodians / middlemen of so much wealth.

Tenoke 5y ago
The biggest part is for onboarding. The second biggest is for lower fees. The third biggest is because it's easier.
- lolinder 5y ago
  And all three of those parts are why the crypto dream of decentralized payments for all will never come to fruition. It is simply not possible for a decentralized system to have the same convenience and low cost as a centralized system. In the end, any decentralized system will tend to have a centralized layer built on top of it that eventually makes the underlying decentralized system obsolete. We see this everywhere: in Web 2.0, in Apple's walled garden, in Canonical's dominance in the desktop Linux space, and in the political history of basically any country you can name. Even most people who in theory support decentralization end up in practice choosing the centralized system every time.
  - Tenoke 5y ago
    I don't see the issue. Plenty of things exist and are useful without being convenient for Joe sixpack to use directly.
- ziml77 5y ago
  Fees are why I haven't moved my ETH after using an exchange to buy some for USD. I don't want to pay the stupidly high costs to move the ETH into a wallet that I fully control. Especially because turning that back to USD so it's actually usable in day-to-day transactions would require paying yet more fees to move the ETH back to an exchange (or to an independent buyer).
  - trotro 5y ago
    Have you had a look at gas prices recently? A transfer costs between 1$ and 2$ depending on the time of the day. It's still much higher than it should be, and let's hope that will change soon with the merge and L2 adoption, but that's not what I would call stupidly high costs to move the ETH.
    - Tenoke 5y ago
      A single transfer for ETH maybe but that's also in part because ETH price is low. If you want to move erc20s it costs significantly more And if your portfolio includes many projects it is unseemly. Also a lot of exchanges or at least the biggest one - Binance - have higher withdraw fees in part because they must make multiple transactions to send your money out.
    - ziml77 5y ago
      I hadn't checked recently. If they're that low then I'm going to pull the coins out now.
hn_throwaway_99 5y ago
While I agree with the premise of not leaving crypto in online wallets, at this point it's absurd to think you can interact with crypto without interacting with exchanges. Very, very, very few people are paid in crypto, and still very few (legitimate) merchants actually accepts crypto as the final form of payment for goods, so if you actually want to use crypto as, you know, money, at some point you'll be dealing with an exchange.
nikanj 5y ago
For a lot of people, running your own node is technobabble. They see the billboard, install the app, and hope they are going to get rich - quick!
deleted 5y ago
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twblalock 5y ago
For the same reason people use banks and brokerages -- it's easy. There are also significant risks to managing your own crypto: managing wallet security is not trivial, people have lost money because they lost their passwords etc. There is a staggering amount of scams to avoid. The level of complexity and risk inherent in self-managing crypto is just too much to expect from the general public.
wsatb 5y ago
The only way cryptocurrency goes mainstream is with these middlemen you speak of. Do you really think the average person has the knowledge and time to manage this themselves? It is far from decentralized, but the entire idea of a decentralized financial system is nothing more than a pipe dream.

Tenoke 5y ago

The biggest part is for onboarding. The second biggest is for lower fees. The third biggest is because it's easier.

lolinder 5y ago
And all three of those parts are why the crypto dream of decentralized payments for all will never come to fruition. It is simply not possible for a decentralized system to have the same convenience and low cost as a centralized system. In the end, any decentralized system will tend to have a centralized layer built on top of it that eventually makes the underlying decentralized system obsolete. We see this everywhere: in Web 2.0, in Apple's walled garden, in Canonical's dominance in the desktop Linux space, and in the political history of basically any country you can name. Even most people who in theory support decentralization end up in practice choosing the centralized system every time.
- Tenoke 5y ago
  I don't see the issue. Plenty of things exist and are useful without being convenient for Joe sixpack to use directly.
ziml77 5y ago
Fees are why I haven't moved my ETH after using an exchange to buy some for USD. I don't want to pay the stupidly high costs to move the ETH into a wallet that I fully control. Especially because turning that back to USD so it's actually usable in day-to-day transactions would require paying yet more fees to move the ETH back to an exchange (or to an independent buyer).
- trotro 5y ago
  Have you had a look at gas prices recently? A transfer costs between 1$ and 2$ depending on the time of the day. It's still much higher than it should be, and let's hope that will change soon with the merge and L2 adoption, but that's not what I would call stupidly high costs to move the ETH.
  - Tenoke 5y ago
    A single transfer for ETH maybe but that's also in part because ETH price is low. If you want to move erc20s it costs significantly more And if your portfolio includes many projects it is unseemly. Also a lot of exchanges or at least the biggest one - Binance - have higher withdraw fees in part because they must make multiple transactions to send your money out.
  - ziml77 5y ago
    I hadn't checked recently. If they're that low then I'm going to pull the coins out now.

hn_throwaway_99 5y ago

While I agree with the premise of not leaving crypto in online wallets, at this point it's absurd to think you can interact with crypto without interacting with exchanges. Very, very, very few people are paid in crypto, and still very few (legitimate) merchants actually accepts crypto as the final form of payment for goods, so if you actually want to use crypto as, you know, money, at some point you'll be dealing with an exchange.

nikanj 5y ago

For a lot of people, running your own node is technobabble. They see the billboard, install the app, and hope they are going to get rich - quick!

deleted 5y ago

[deleted]

twblalock 5y ago

For the same reason people use banks and brokerages -- it's easy. There are also significant risks to managing your own crypto: managing wallet security is not trivial, people have lost money because they lost their passwords etc. There is a staggering amount of scams to avoid. The level of complexity and risk inherent in self-managing crypto is just too much to expect from the general public.

wsatb 5y ago

The only way cryptocurrency goes mainstream is with these middlemen you speak of. Do you really think the average person has the knowledge and time to manage this themselves? It is far from decentralized, but the entire idea of a decentralized financial system is nothing more than a pipe dream.