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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 da

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 Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account.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.

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.