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Question: why do people keep coins in exchange wallets when you could just keep them in personal wallets and not have to worry about losing them? What's the app

Question: why do people keep coins in exchange wallets when you could just keep them in personal wallets and not have to worry about losing them? What's the appeal?

Fatnino 4y ago
They want the coins nearer to the exchange so they can be traded on short notice without incurring miners fees.
dragontamer 4y ago
Transaction fees. If you traded for USD to BTC to USD under normal circumstances, you've got: 1. Alice wants to buy something from Bob. 2. Alice buys BTC for USD, incurring one TX fee. 3. Alice pays BTC / mining costs to transfer BTC to Bob, a 2nd TX Fee. 4. Bob transfers BTC to an exchange for USD, a 3rd Tx fee. ------------ Now lets say everything were centralized. 1. Alice opens an account at FTX. She buys "virtual BTC" (just an account at FTX, not a real wallet transaction). 2. Alice transfers money to Bob, possibly through FTX. 3. Bob sells this "virtual BTC" back for dollars. 4. Note that unlike the first example, this transaction is instantaneous. The first example requires waiting for confirmation at each transaction. Confirmations nominally happen every 10 minutes, but there have been times when the wait has been days (remember when Steam adopted BTC and the network couldn't handle the load? I remember) FTX can charge a transaction fee at #1 and #3, and still the whole process will be cheaper than the 3x transaction fees incurred over decentralized methodologies. Of course, when FTX collapses, everybody's money is gone.
- spritefs 4y ago
  considering recent bad press the cost of the additional transaction fee seems like very cheap insurance
  - dragontamer 4y ago
    The cost of a transaction fee varies from anywhere from $1 to $50 depending on network conditions, and those transactions can take anywhere from 10 minutes to 10 days to complete. People don't like "market rates" for transactions that change day by day, hour by hour. People also don't like their transactions getting stuck in the queue for days-and-days on end, possibly causing commerce issues. ------- Or as people used to say about a year or two ago. BTC is no longer about transactions, its now about store of value. Except now we've lost the store of value story, since BTC declined by 60%+ (on top of inflation). So BTC ain't that either.
- vlovich123 4y ago
  I think you’ve just described what happens in a normal bank, except with less regulation and more scams. What’s the point?
  - twisteriffic 4y ago
    > more scams I think you found the point right there.
- runnerup 4y ago
  Not to mention, the first procedure is partially/mostly illegal in the USA now. Localbitcoins.com doesn't facilitate in-person transactions anymore and coffee-shop brokers operating over craigslist have been prosecuted.
itake 4y ago
Quick exit to the door. No need to wait for a block and for the CEX to verify your coins.
Euphorbium 4y ago
It is a calculated risk. I am more likely to lose the wallet.

Question: why do people keep coins in exchange wallets when you could just keep them in personal wallets and not have to worry about losing them? What's the appeal?

Fatnino 4y ago

They want the coins nearer to the exchange so they can be traded on short notice without incurring miners fees.

dragontamer 4y ago

Transaction fees. If you traded for USD to BTC to USD under normal circumstances, you've got: 1. Alice wants to buy something from Bob. 2. Alice buys BTC for USD, incurring one TX fee. 3. Alice pays BTC / mining costs to transfer BTC to Bob, a 2nd TX Fee. 4. Bob transfers BTC to an exchange for USD, a 3rd Tx fee. ------------ Now lets say everything were centralized. 1. Alice opens an account at FTX. She buys "virtual BTC" (just an account at FTX, not a real wallet transaction). 2. Alice transfers money to Bob, possibly through FTX. 3. Bob sells this "virtual BTC" back for dollars. 4. Note that unlike the first example, this transaction is instantaneous. The first example requires waiting for confirmation at each transaction. Confirmations nominally happen every 10 minutes, but there have been times when the wait has been days (remember when Steam adopted BTC and the network couldn't handle the load? I remember) FTX can charge a transaction fee at #1 and #3, and still the whole process will be cheaper than the 3x transaction fees incurred over decentralized methodologies. Of course, when FTX collapses, everybody's money is gone.

spritefs 4y ago
considering recent bad press the cost of the additional transaction fee seems like very cheap insurance
- dragontamer 4y ago
  The cost of a transaction fee varies from anywhere from $1 to $50 depending on network conditions, and those transactions can take anywhere from 10 minutes to 10 days to complete. People don't like "market rates" for transactions that change day by day, hour by hour. People also don't like their transactions getting stuck in the queue for days-and-days on end, possibly causing commerce issues. ------- Or as people used to say about a year or two ago. BTC is no longer about transactions, its now about store of value. Except now we've lost the store of value story, since BTC declined by 60%+ (on top of inflation). So BTC ain't that either.
vlovich123 4y ago
I think you’ve just described what happens in a normal bank, except with less regulation and more scams. What’s the point?
- twisteriffic 4y ago
  > more scams I think you found the point right there.
runnerup 4y ago
Not to mention, the first procedure is partially/mostly illegal in the USA now. Localbitcoins.com doesn't facilitate in-person transactions anymore and coffee-shop brokers operating over craigslist have been prosecuted.

itake 4y ago

Quick exit to the door. No need to wait for a block and for the CEX to verify your coins.

Euphorbium 4y ago

It is a calculated risk. I am more likely to lose the wallet.