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I still don’t understand why people keep their crypto in Exchanges… Is it that difficult to have a secure private address where you keep your crypto? I get it

I still don’t understand why people keep their crypto in Exchanges… Is it that difficult to have a secure private address where you keep your crypto? I get it that if you want to exchange and play with the markets you need to have your crypto in a shared wallet, but why for f** shake would you put all your money there? That’s the whole point with crypto, you don’t need a bank (exchange) to store them for you. Not your keys, not your coins :-)

stingrae 4y ago
Why? It is what people are used to with traditional stores of value. Banks, brokers, etc.
- yellow_postit 4y ago
  Exactly this coupled with ease of use. How often for stocks purchased via a broker do you go and reregister them to direct registration so the certificates are in your name? At this point I’m beginning to think the “not your keys” group is arguing in bad faith every time an exchange fails for failing to see why a retail investor would prefer an exchange.
  - LawTalkingGuy 4y ago
    I'm far from a crypto pusher but I've been around it for years... The issue is that exchanges are pretty much guaranteed to be frauds, by market dynamics. There are only a few routes to profit, 1) charge users or 2) use user's funds to trade, or 3) trade against the user but with more knowledge. One of those is limited to maybe $20 per year, the other two are crimes. Every single crypto exchange picked one or both of the crime strategies because it was the way to make an exchange wildly profitable. People who did use exchanges are people who were doing things they were warned were not a good idea, and were doing it for the obviously unrealistic gains and imho would have simply mailed their money to a Ponzi scam if that was all that was available. Everything has some weakness and crypto is like cash here - if you let someone hold onto it for even a second they can refuse to return it. I don't think you can blame a community of honest developers who described and detailed the risks for intentionally self-deluding investors. A 100%+ yearly return is a better indicator of something wrong than of a great untapped opportunity and these investors tried betting against people who they were assured were scammers and when that failed they blame the currency. It's like trying to win a rigged game against a carnie and then blaming the bus driver who gave you a ride to the carnival.
  - catiopatio 4y ago
    The “not your keys” group understands that a centralized exchange is not crypto currency. If all you’ve done is reinvent the existing monetary system minus all regulation, oversight and value, you’ve invented absolutely nothing at all. Except, perhaps, a novel new way to convince rubes to give you their money.
paulpauper 4y ago
to trade it? You cannot trade or convert to cash unless you use some sort of exchange. If you want to go from something like BTC to Shibu you need an exchange. There are some decentlrized alternatives but the volume is tiny. BISQ still has absolute shit volume and hard to use. It's not intended for trading or cashing out large sums.
- NKosmatos 4y ago
  Sure, I get that. But why on earth keep all of it there? You can keep the majority of your crypto in a private address (hardware wallet, cold storage, metal plates…whatever) and only transfer/use as much as you’re willing to play/trade/convert.
  - mimon 4y ago
    Because crypto in cold storage doesn't earn interest and can't be used as collateral for a margin loan. Crypto is full of people looking for to get rich quick with interest rates that are obvious ponzi schemes and/or by taking on insane leverage. They don't want to just put tokens in an offline wallet and watch the market prices.
  - yellow_postit 4y ago
    Up until recently for ETH this was non tenable given the gas fees.
    - HWR_14 4y ago
      Have ETH gas fees come down since the move away from POW to POS?
      - yellow_postit 4y ago
        They haven’t actually, I thought there was a relationship but in researching more I was wrong. Even more of a reason retail would opt for an exchange then.
- 4y ago
swarnie 4y ago
I think a few of the headline writers offered Bernie++ levels of return for money held with them. Should have been a red flag on reflection
time_to_smile 4y ago
This is the 3rd wave of crypto enthusiasm that I've observed. In the first wave it was exclusively technical people who understood the details of blockchain, and where fascinated with the tech and perhaps a bit naively enthusiastic about the social component. Then the second wave was technical adjacent people. Most of the "investors" I knew they were less technical people but still in the startup scene. Most of them didn't really understand how cryptocurrencies worked, but weren't completely clueless. They still had to figure out how to create a wallet, acquire coins etc but could only give you a hand wavy understanding of how various currencies actually worked. This current wave was the naive retail wave, where large masses of people who fundamentally do not understand the underlying technology started getting involved. Most of these people in earnest do not understand what a "wallet" is, have no idea how to use crypto currencies outside of a central exchange. All they know is "a lot of people seem to be making easy money off this". This is precisely why so many of the loudest critics in this current wave where crypto enthusiasts in the first wave. It became increasingly clear to anyone with technical understanding of the topic that the only explanation for what we're seeing is a lot of the very financial corruption and scams they were hoping to fight in the first wave.
- wizeman 4y ago
  That's an interesting observation and I agree with you (I'm a first-wave crypto advocate myself). I've said this before here on HN, but I think crypto exchanges should require new customers to pass a relatively strict test about crypto, investment and trading basics before they could start operating with cryptocurrencies or other such trading products. I think crypto exchanges are an ideal platform to do this because they're usually the onboarding ramp for most new crypto users, especially the ones losing massive amounts of money recently. I believe this would be in the best interest of the whole crypto industry and could be a massive improvement in the reputation and usage of crypto in the long term, even if it could have some detrimental effects in the short run (due to being an entry barrier for new users). Because it's obvious to anyone not asleep at the wheel that many new crypto users do not know what they're getting into, or rather, all the risks that they are undertaking when they get their money into crypto exchanges, cryptocurrencies and/or crypto-related... thingies.
bsaul 4y ago
People don’t even trust themselves to host their photos. they rely on cloud providers for that. How do you expect them to become their own digital bank. It makes absolutely no sense.
- status200 4y ago
  If i had to operate at the lowest common denominator in every realm, it would be a miserable experience. Just because certain people are incompetent doesnt mean that the option should not exist.
  - thatguy0900 4y ago
    I don't think he's saying the option shouldn't exist, just that it's not sensible to yell at the people using exchanges like what they're doing doesn't make sense. You have the option of buying a vault and not using banks in fiat, too, though I very much doubt you do that.
- catiopatio 4y ago
  If that’s true, then “crypto” is just traditional finance with extra steps (and near-zero regulatory oversight).

stingrae 4y ago

Why? It is what people are used to with traditional stores of value. Banks, brokers, etc.

yellow_postit 4y ago
Exactly this coupled with ease of use. How often for stocks purchased via a broker do you go and reregister them to direct registration so the certificates are in your name? At this point I’m beginning to think the “not your keys” group is arguing in bad faith every time an exchange fails for failing to see why a retail investor would prefer an exchange.
- LawTalkingGuy 4y ago
  I'm far from a crypto pusher but I've been around it for years... The issue is that exchanges are pretty much guaranteed to be frauds, by market dynamics. There are only a few routes to profit, 1) charge users or 2) use user's funds to trade, or 3) trade against the user but with more knowledge. One of those is limited to maybe $20 per year, the other two are crimes. Every single crypto exchange picked one or both of the crime strategies because it was the way to make an exchange wildly profitable. People who did use exchanges are people who were doing things they were warned were not a good idea, and were doing it for the obviously unrealistic gains and imho would have simply mailed their money to a Ponzi scam if that was all that was available. Everything has some weakness and crypto is like cash here - if you let someone hold onto it for even a second they can refuse to return it. I don't think you can blame a community of honest developers who described and detailed the risks for intentionally self-deluding investors. A 100%+ yearly return is a better indicator of something wrong than of a great untapped opportunity and these investors tried betting against people who they were assured were scammers and when that failed they blame the currency. It's like trying to win a rigged game against a carnie and then blaming the bus driver who gave you a ride to the carnival.
- catiopatio 4y ago
  The “not your keys” group understands that a centralized exchange is not crypto currency. If all you’ve done is reinvent the existing monetary system minus all regulation, oversight and value, you’ve invented absolutely nothing at all. Except, perhaps, a novel new way to convince rubes to give you their money.

paulpauper 4y ago

to trade it? You cannot trade or convert to cash unless you use some sort of exchange. If you want to go from something like BTC to Shibu you need an exchange. There are some decentlrized alternatives but the volume is tiny. BISQ still has absolute shit volume and hard to use. It's not intended for trading or cashing out large sums.

NKosmatos 4y ago
Sure, I get that. But why on earth keep all of it there? You can keep the majority of your crypto in a private address (hardware wallet, cold storage, metal plates…whatever) and only transfer/use as much as you’re willing to play/trade/convert.
- mimon 4y ago
  Because crypto in cold storage doesn't earn interest and can't be used as collateral for a margin loan. Crypto is full of people looking for to get rich quick with interest rates that are obvious ponzi schemes and/or by taking on insane leverage. They don't want to just put tokens in an offline wallet and watch the market prices.
- yellow_postit 4y ago
  Up until recently for ETH this was non tenable given the gas fees.
  - HWR_14 4y ago
    Have ETH gas fees come down since the move away from POW to POS?
    - yellow_postit 4y ago
      They haven’t actually, I thought there was a relationship but in researching more I was wrong. Even more of a reason retail would opt for an exchange then.
4y ago

swarnie 4y ago

I think a few of the headline writers offered Bernie++ levels of return for money held with them. Should have been a red flag on reflection

time_to_smile 4y ago

This is the 3rd wave of crypto enthusiasm that I've observed. In the first wave it was exclusively technical people who understood the details of blockchain, and where fascinated with the tech and perhaps a bit naively enthusiastic about the social component. Then the second wave was technical adjacent people. Most of the "investors" I knew they were less technical people but still in the startup scene. Most of them didn't really understand how cryptocurrencies worked, but weren't completely clueless. They still had to figure out how to create a wallet, acquire coins etc but could only give you a hand wavy understanding of how various currencies actually worked. This current wave was the naive retail wave, where large masses of people who fundamentally do not understand the underlying technology started getting involved. Most of these people in earnest do not understand what a "wallet" is, have no idea how to use crypto currencies outside of a central exchange. All they know is "a lot of people seem to be making easy money off this". This is precisely why so many of the loudest critics in this current wave where crypto enthusiasts in the first wave. It became increasingly clear to anyone with technical understanding of the topic that the only explanation for what we're seeing is a lot of the very financial corruption and scams they were hoping to fight in the first wave.

wizeman 4y ago
That's an interesting observation and I agree with you (I'm a first-wave crypto advocate myself). I've said this before here on HN, but I think crypto exchanges should require new customers to pass a relatively strict test about crypto, investment and trading basics before they could start operating with cryptocurrencies or other such trading products. I think crypto exchanges are an ideal platform to do this because they're usually the onboarding ramp for most new crypto users, especially the ones losing massive amounts of money recently. I believe this would be in the best interest of the whole crypto industry and could be a massive improvement in the reputation and usage of crypto in the long term, even if it could have some detrimental effects in the short run (due to being an entry barrier for new users). Because it's obvious to anyone not asleep at the wheel that many new crypto users do not know what they're getting into, or rather, all the risks that they are undertaking when they get their money into crypto exchanges, cryptocurrencies and/or crypto-related... thingies.

bsaul 4y ago

People don’t even trust themselves to host their photos. they rely on cloud providers for that. How do you expect them to become their own digital bank. It makes absolutely no sense.

status200 4y ago
If i had to operate at the lowest common denominator in every realm, it would be a miserable experience. Just because certain people are incompetent doesnt mean that the option should not exist.
- thatguy0900 4y ago
  I don't think he's saying the option shouldn't exist, just that it's not sensible to yell at the people using exchanges like what they're doing doesn't make sense. You have the option of buying a vault and not using banks in fiat, too, though I very much doubt you do that.
catiopatio 4y ago
If that’s true, then “crypto” is just traditional finance with extra steps (and near-zero regulatory oversight).