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> Most bitcoin investors never move their coins off the exchange Apart from having insider knowledge in how cryptocurrency exchanges operate and their data, ho

> Most bitcoin investors never move their coins off the exchange Apart from having insider knowledge in how cryptocurrency exchanges operate and their data, how could you possibly know this? One address on the blockchain can belong to one or more users, just like one user can have one or more addresses on the blockchain, so being able to compare feels impossible even if you had insider knowledge/data.

rippercushions 4y ago
Because when you buy or sell crypto on a centralized exchange, no actual blockchain transactions take place, it's just shuffling bits in the exchange's local database.
- capableweb 4y ago
  Wait, what? So because trading cryptocurrency on a centralized exchange doesn't involve a blockchain, the conclusion is "Most bitcoin investors never move their coins off the exchange"? I'm missing some vital step in your reasoning here.
  - Karunamon 4y ago
    Yes that's pretty much the extent of the reasoning and I don't see what's wrong with that. Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account. This strongly decouples bitcoin and most other cryptos from the total money supply. When you're on Binance and you send them one BTC as a block chain transaction, you are receiving one Binance!BTC that does not exist outside of that walled garden.
    - v8xi 4y ago
      In that case you "own" a paper bitcoin, which is much the same as not owning one at all. In this case, the "bitcoin" you own doesn't even exist (outside of the exchanges database) so you cannot use this to speculate on actual bitcoin in actual wallets. Just look at FTX - some 1.8B in BTC liabilities but zero BTC assets
      - three_seagrass 4y ago
        Just because you don't have a bearer bond doesn't mean you haven't invested in bonds. Modern finance isn't about holding an invested asset in your hands. This splitting hairs over "true" ownership ignores the fact that the original investor analysis done by GP here premised on chain transactions is still semantically wrong.
  - yieldcrv 4y ago
    many exchanges boast user stats and funding stats which don't match a corresponding increase in addresses, we can also corroborate this with the size of the exchange's known hot and cold wallets, and further corroborate this with periods of time later when many users do move funds to distinct addresses outside of exchanges, the difference with what remains on exchange we can (or have to) assume to be distinct users. finally, there have been periods of time when its not worth it to move funds off of exchange because the transaction fees would eat the small amounts that poorer/less capitalized users bought and hold. that still leaves us with "most". everyone knows the theoretical issues and incompleteness of this statistics collection - since there is no single public or verifiable stat to use - its pretty new to be a person that chooses assume its more likely that people are having distinct addresses on chain, than assume its more likely they're on an exchange kind of funny how we go full circle here, but okay. hope that helps your reasoning. this article has no way of making its claims either, so there's really no point of appealing to either authority or bolster any opinion.
mindslight 4y ago
What if as part of bankruptcy proceedings, especially for a that business goes under due to fraud (effectively a failure of transparency/oversight), the business's datasets were opened up to regulators or the public domain rather than treating them as business assets to be sold for cheap to the next exploiter. Then one could actually run these kinds of reports on real data, that would otherwise be kept proprietary. The issue of one's "private" data then becoming part of a public dataset could be alleviated with deidentification, plus a better acceptance that when companies accumulate data about you, it's generally going to get exploited in some way or another.
- capableweb 4y ago
  > Then one could actually run these kinds of reports on real data, that would otherwise be kept proprietary. Every cryptocurrency exchange would have to go bankrupt before you could make sweeping statements like that if so.
- lupire 4y ago
  > deidentification Is consistently proven to be a myth.
giaour 4y ago
It doesn't matter if the "most" statement is correct. Some investors never move their coins off the exchange; therefore, the inference that 49.4% of investors have made money because you can see that in recorded transactions is based on a faulty premise. Unless you're arguing that only a negligible number of exchange users do this, which seems implausible and would also assume facts not in evidence.

rippercushions 4y ago

Because when you buy or sell crypto on a centralized exchange, no actual blockchain transactions take place, it's just shuffling bits in the exchange's local database.

capableweb 4y ago
Wait, what? So because trading cryptocurrency on a centralized exchange doesn't involve a blockchain, the conclusion is "Most bitcoin investors never move their coins off the exchange"? I'm missing some vital step in your reasoning here.
- Karunamon 4y ago
  Yes that's pretty much the extent of the reasoning and I don't see what's wrong with that. Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account. This strongly decouples bitcoin and most other cryptos from the total money supply. When you're on Binance and you send them one BTC as a block chain transaction, you are receiving one Binance!BTC that does not exist outside of that walled garden.
  - v8xi 4y ago
    In that case you "own" a paper bitcoin, which is much the same as not owning one at all. In this case, the "bitcoin" you own doesn't even exist (outside of the exchanges database) so you cannot use this to speculate on actual bitcoin in actual wallets. Just look at FTX - some 1.8B in BTC liabilities but zero BTC assets
    - three_seagrass 4y ago
      Just because you don't have a bearer bond doesn't mean you haven't invested in bonds. Modern finance isn't about holding an invested asset in your hands. This splitting hairs over "true" ownership ignores the fact that the original investor analysis done by GP here premised on chain transactions is still semantically wrong.
- yieldcrv 4y ago
  many exchanges boast user stats and funding stats which don't match a corresponding increase in addresses, we can also corroborate this with the size of the exchange's known hot and cold wallets, and further corroborate this with periods of time later when many users do move funds to distinct addresses outside of exchanges, the difference with what remains on exchange we can (or have to) assume to be distinct users. finally, there have been periods of time when its not worth it to move funds off of exchange because the transaction fees would eat the small amounts that poorer/less capitalized users bought and hold. that still leaves us with "most". everyone knows the theoretical issues and incompleteness of this statistics collection - since there is no single public or verifiable stat to use - its pretty new to be a person that chooses assume its more likely that people are having distinct addresses on chain, than assume its more likely they're on an exchange kind of funny how we go full circle here, but okay. hope that helps your reasoning. this article has no way of making its claims either, so there's really no point of appealing to either authority or bolster any opinion.

mindslight 4y ago

What if as part of bankruptcy proceedings, especially for a that business goes under due to fraud (effectively a failure of transparency/oversight), the business's datasets were opened up to regulators or the public domain rather than treating them as business assets to be sold for cheap to the next exploiter. Then one could actually run these kinds of reports on real data, that would otherwise be kept proprietary. The issue of one's "private" data then becoming part of a public dataset could be alleviated with deidentification, plus a better acceptance that when companies accumulate data about you, it's generally going to get exploited in some way or another.

capableweb 4y ago
> Then one could actually run these kinds of reports on real data, that would otherwise be kept proprietary. Every cryptocurrency exchange would have to go bankrupt before you could make sweeping statements like that if so.
lupire 4y ago
> deidentification Is consistently proven to be a myth.

giaour 4y ago

It doesn't matter if the "most" statement is correct. Some investors never move their coins off the exchange; therefore, the inference that 49.4% of investors have made money because you can see that in recorded transactions is based on a faulty premise. Unless you're arguing that only a negligible number of exchange users do this, which seems implausible and would also assume facts not in evidence.