4 ms·

What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use co

What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized...

apozem 4y ago
It’s the obvious thing, convenience. Humans love convenience. People build billion-dollar businesses like Steam and Spotify that basically sell convenience. Makes sense that a lot of people just want an easy way to manage their crypto. If you’re not ideologically dedicated to decentralization, why not do the easy thing?
patwolf 4y ago
It takes discipline to keep a wallet safe. I used to discount the risk of that, but over time I feel less and less confident in the average person's ability to not lose a wallet or have it hacked. To me Coinbase feels more like bank. Once I deposit money I no longer worry about the physical security of that money. Clearly that isn't the case given it's not FDIC insured, but the fact that it's a multi-billion dollar publicly-traded corporation instills some confidence.
- mellavora 4y ago
  > To me Coinbase feels more like bank. Once I deposit money I no longer worry about the physical security of that money. Clearly that isn't the case given it's not FDIC insured, but the fact that it's a multi-billion dollar publicly-traded corporation instills some confidence. And that is the danger. It feels like a bank, and lots of other people also feel it is like a bank, so you figure you are safe. But it is not a bank. It does not offer the regulator protection of a bank. Feelings don't change that. A good UI does not change that. Only regulation change that.
- blihp 4y ago
  Unless Coinbase is regulated like a bank or brokerage, what it feels like is irrelevant if you're in the U.S. Short of your deposits being FDIC or SIPC insured you know all you need to know: every cent and/or coin you have with them is at risk.
Auracle 4y ago
Early on I had some Bitcoin hacked from a wallet. That was before wallets even had passwords, if I remember correctly. I bought a hardware wallet years ago and then decided not to use it. If Coinbase goes down crypto as a whole will probably be brought under with it, so I’d rather have someone else manage it for me.
mbesto 4y ago
Would you like to explain to my 70 year old mother that she should install a Chrome extension, transfer her coins to it and expect her not to lose that? Oh and then explain to her that she is going to print out a piece of paper with 12 words on it. That's her backup in case she loses everything...so "Mom, do not lose this piece of paper you're screwed!" Yes she'll figure that out easily!
- ahmetrcagil 4y ago
  Maaaybe 70 y.o. moms should not invest in crypto then?
  - cnelsenmilt 4y ago
    This and also arguably 70 year old moms are probably just fine at "don't lose this crucial piece of paper" given stuff like social security cards, birth certificates, savings bonds, and all the other bits that have been important pieces of paper for most of their lives.
    - mbesto 4y ago
      > social security cards, birth certificates These can be reissued: https://www.usa.gov/replace-vital-documents https://www.usa.gov/replace-vital-documents Crypto on the other hand is just like "you're screwed, go scour the landfill for your hard drive". Also, isn't the promise of crypto/defi that it's supposed to NOT be like those archaic systems (SSN, birth certs, etc.)?!
  - nytesky 4y ago
    Then crypto will never be the future of money. That's their point. But honestly, most HN uses password managers -- if crypto became primary currency, that would make hacking someplace like Bitwarden or Coinbase enormous world shattering honeypots -- like Nation state targets.
    - svnt 4y ago
      There’s no future limit, it is just that the present UI is garbage. Grandma should wait.
tablespoon 4y ago
> What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized... The real purpose of Bitcoin is to speculate on the roller coaster. Everything else is basically woo that's needed to fuel it. The "future of money" where people by their coffee with a super-secure private wallet is a lie.
- iamthirsty 4y ago
  > The real purpose of Bitcoin is to speculate on the roller coaster. > Everything else is basically woo that's needed to fuel the speculative roller coaster. For some people sure, but not all, and I would even go as far as to say not the main intention of the original product.
  - tablespoon 4y ago
    > For some people sure, but not all, and I would even go as far as to say not the main intention of the original product. It certainly wasn't the "main intention of the original product," but Bitcoin failed at that. A big part of that failure was the peculiar ideology that got baked in through many of its design decisions.
    - jobs_throwaway 4y ago
      > but Bitcoin failed at that what makes you say that? I use bitcoin to conduct private transactions regularly and its pretty darn solid for that purpose. Doing such a transaction over the internet, before bitcoin, required you to use permissioned rails.
      - tablespoon 4y ago
        > what makes you say that? I use bitcoin to conduct private transactions regularly and its pretty darn solid for that purpose. Doing such a transaction over the internet, before bitcoin, required you to use permissioned rails. Just because it can be used like that doesn't mean it actually succeeded. The vast majority of Bitcoin is held as a speculative investment, and the deflationary aspects are a strong disincentive to regular circulation.
gigaflop 4y ago
You can 100% create and manage your own wallets on your own hardware. However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. And, if you want to sell on an exchange, you likely need to transfer the tokens into the exchange wallet anyways. If someone is buying crypto to hold it for years, then wallets and hardware keys and 12-word passphrases make the most sense. If you're not sure if you'll hold a coin for long, or are speculating, or have less than $5k on the exchange, it might not be worth the hassle (for the indeterminate 'you') to create and manage your own wallets.
- nybble41 4y ago
  > However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. Most might, but Coinbase does not. Outgoing transfers are free—they even cover the network fee. For incoming transfers the sender pays the network fee but there is no additional charge. It's a bit of a hassle to shift funds around, and not having your funds instantly available on the exchange limits your ability to take advantage of short-term opportunities, but in general I would still recommend self-custody over leaving "large" amounts of crypto on an exchange for very long. That's less due to the risk of bankruptcy and more due to the risk of the exchange getting hacked—practically speaking we have more real-world examples of the latter case, discounting bankruptcy directly resulting from a previous hack.
- deleted 4y ago
  [deleted]

apozem 4y ago

It’s the obvious thing, convenience. Humans love convenience. People build billion-dollar businesses like Steam and Spotify that basically sell convenience. Makes sense that a lot of people just want an easy way to manage their crypto. If you’re not ideologically dedicated to decentralization, why not do the easy thing?

patwolf 4y ago

It takes discipline to keep a wallet safe. I used to discount the risk of that, but over time I feel less and less confident in the average person's ability to not lose a wallet or have it hacked. To me Coinbase feels more like bank. Once I deposit money I no longer worry about the physical security of that money. Clearly that isn't the case given it's not FDIC insured, but the fact that it's a multi-billion dollar publicly-traded corporation instills some confidence.

mellavora 4y ago
> To me Coinbase feels more like bank. Once I deposit money I no longer worry about the physical security of that money. Clearly that isn't the case given it's not FDIC insured, but the fact that it's a multi-billion dollar publicly-traded corporation instills some confidence. And that is the danger. It feels like a bank, and lots of other people also feel it is like a bank, so you figure you are safe. But it is not a bank. It does not offer the regulator protection of a bank. Feelings don't change that. A good UI does not change that. Only regulation change that.
blihp 4y ago
Unless Coinbase is regulated like a bank or brokerage, what it feels like is irrelevant if you're in the U.S. Short of your deposits being FDIC or SIPC insured you know all you need to know: every cent and/or coin you have with them is at risk.

Auracle 4y ago

Early on I had some Bitcoin hacked from a wallet. That was before wallets even had passwords, if I remember correctly. I bought a hardware wallet years ago and then decided not to use it. If Coinbase goes down crypto as a whole will probably be brought under with it, so I’d rather have someone else manage it for me.

mbesto 4y ago

Would you like to explain to my 70 year old mother that she should install a Chrome extension, transfer her coins to it and expect her not to lose that? Oh and then explain to her that she is going to print out a piece of paper with 12 words on it. That's her backup in case she loses everything...so "Mom, do not lose this piece of paper you're screwed!" Yes she'll figure that out easily!

ahmetrcagil 4y ago
Maaaybe 70 y.o. moms should not invest in crypto then?
- cnelsenmilt 4y ago
  This and also arguably 70 year old moms are probably just fine at "don't lose this crucial piece of paper" given stuff like social security cards, birth certificates, savings bonds, and all the other bits that have been important pieces of paper for most of their lives.
  - mbesto 4y ago
    > social security cards, birth certificates These can be reissued: https://www.usa.gov/replace-vital-documents https://www.usa.gov/replace-vital-documents Crypto on the other hand is just like "you're screwed, go scour the landfill for your hard drive". Also, isn't the promise of crypto/defi that it's supposed to NOT be like those archaic systems (SSN, birth certs, etc.)?!
- nytesky 4y ago
  Then crypto will never be the future of money. That's their point. But honestly, most HN uses password managers -- if crypto became primary currency, that would make hacking someplace like Bitwarden or Coinbase enormous world shattering honeypots -- like Nation state targets.
  - svnt 4y ago
    There’s no future limit, it is just that the present UI is garbage. Grandma should wait.

tablespoon 4y ago

> What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized... The real purpose of Bitcoin is to speculate on the roller coaster. Everything else is basically woo that's needed to fuel it. The "future of money" where people by their coffee with a super-secure private wallet is a lie.

iamthirsty 4y ago
> The real purpose of Bitcoin is to speculate on the roller coaster. > Everything else is basically woo that's needed to fuel the speculative roller coaster. For some people sure, but not all, and I would even go as far as to say not the main intention of the original product.
- tablespoon 4y ago
  > For some people sure, but not all, and I would even go as far as to say not the main intention of the original product. It certainly wasn't the "main intention of the original product," but Bitcoin failed at that. A big part of that failure was the peculiar ideology that got baked in through many of its design decisions.
  - jobs_throwaway 4y ago
    > but Bitcoin failed at that what makes you say that? I use bitcoin to conduct private transactions regularly and its pretty darn solid for that purpose. Doing such a transaction over the internet, before bitcoin, required you to use permissioned rails.
    - tablespoon 4y ago
      > what makes you say that? I use bitcoin to conduct private transactions regularly and its pretty darn solid for that purpose. Doing such a transaction over the internet, before bitcoin, required you to use permissioned rails. Just because it can be used like that doesn't mean it actually succeeded. The vast majority of Bitcoin is held as a speculative investment, and the deflationary aspects are a strong disincentive to regular circulation.

gigaflop 4y ago

You can 100% create and manage your own wallets on your own hardware. However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. And, if you want to sell on an exchange, you likely need to transfer the tokens into the exchange wallet anyways. If someone is buying crypto to hold it for years, then wallets and hardware keys and 12-word passphrases make the most sense. If you're not sure if you'll hold a coin for long, or are speculating, or have less than $5k on the exchange, it might not be worth the hassle (for the indeterminate 'you') to create and manage your own wallets.

nybble41 4y ago
> However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. Most might, but Coinbase does not. Outgoing transfers are free—they even cover the network fee. For incoming transfers the sender pays the network fee but there is no additional charge. It's a bit of a hassle to shift funds around, and not having your funds instantly available on the exchange limits your ability to take advantage of short-term opportunities, but in general I would still recommend self-custody over leaving "large" amounts of crypto on an exchange for very long. That's less due to the risk of bankruptcy and more due to the risk of the exchange getting hacked—practically speaking we have more real-world examples of the latter case, discounting bankruptcy directly resulting from a previous hack.
deleted 4y ago
[deleted]