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Honest question: why are people using online wallets to keep big amount of bitcoins? Isn't it risky per-se? And just to make sure I understand this: a personal

Honest question: why are people using online wallets to keep big amount of bitcoins? Isn't it risky per-se? And just to make sure I understand this: a personal wallet (in a USB, my laptop, my dropbox, whatever), would not be susceptible to these risks, right? (of course, other risks apply, like somebody accessing your wallet, or losing it) I guess the users of the online wallets have no direct access to their wallets, so they can not order a transfer to a private wallet to recover their money. Probably there is not even a per-user wallet, but a wallet for the pool of MtGox clients?

DanBC 13y ago
I've heard that traders keep large amounts in online wallets. It is bizarre behaviour - online wallets are risky and have had several large hacks and losses; trading is inherently risky.
jjoonathan 13y ago
Liquidity. Offline wallets are risky in that they could delay a cash-out in the face of plummeting bitcoin value.
driverdan 13y ago
Foolishness. People will give you all kinds of excuses as to why they'd do something as stupid as that, but the reality is that there's no reason to keep massive amounts of BTC in an online wallet. The only reason that comes close to being realistic is trading and even then you'd only need to keep the amount you trade.
smtddr 13y ago
* Day-trading So on a site like btc-e.com, if you're buying & selling on little peaks & valleys you can make significant income. If you buy 400 litecoin for 14 then the price goes up 3 bucks after 5 hours, you've just made over $1,000. You can't make these plays with an offline wallet. I day trade on btc-e.com but always move my coins to an offline wallet when they grow to an uncomfortable amount. Because of my fear of hacks though, I'm only making $30 or $40 bucks. I could dump 7 or 8k into the system and daytrade making over $1,000 a day... but then I'd be taking up the risk that a hack empties my account. Some people take that risk. I'm willing to risk up to 7k on crypto, but I don't want to risk losing it to a random online-wallet hack. However, if I unexpectedly got 5k out of thin air(say H&R Block found some tax deductions never noticed before) I'd day-trade that and risk losing it to hack. Another problem is that if you make profit on btc-e.com, you now have a bunch of USD sitting there[1] that you cannot transfer out. You don't want to withdraw that USD to your bank account because that's a slow process that takes more than 24 hrs. You're out of the game until all that bank stuff settles. I bought a bunch of litecoins on xmas-eve 2013, then on xmas-day the price suddenly doubled. I had to move my coins out of my offline wallet back to btc-e and sell. I made money, but now I had USD in btc-e that I can't get out. Afterall, I don't want to buy the coins I just sold for profit. I have to wait until the price drops. Now, if btc-e got hacked. The hackers would just buy whatever they could with my funds and withdraw the coins. I've lost. ___ 1. Unlike coinbase.com, btc-e.com allows you to have a fiat balance. I guess think of etrade.com, where you can transfer money out of your bank to etrade. Once those funds are confirmed, you can buy stock instantly because etrade already has your money and doesn't need to talk to your bank again.

DanBC 13y ago

I've heard that traders keep large amounts in online wallets. It is bizarre behaviour - online wallets are risky and have had several large hacks and losses; trading is inherently risky.

jjoonathan 13y ago

Liquidity. Offline wallets are risky in that they could delay a cash-out in the face of plummeting bitcoin value.

driverdan 13y ago

Foolishness. People will give you all kinds of excuses as to why they'd do something as stupid as that, but the reality is that there's no reason to keep massive amounts of BTC in an online wallet. The only reason that comes close to being realistic is trading and even then you'd only need to keep the amount you trade.

smtddr 13y ago

* Day-trading So on a site like btc-e.com, if you're buying & selling on little peaks & valleys you can make significant income. If you buy 400 litecoin for 14 then the price goes up 3 bucks after 5 hours, you've just made over $1,000. You can't make these plays with an offline wallet. I day trade on btc-e.com but always move my coins to an offline wallet when they grow to an uncomfortable amount. Because of my fear of hacks though, I'm only making $30 or $40 bucks. I could dump 7 or 8k into the system and daytrade making over $1,000 a day... but then I'd be taking up the risk that a hack empties my account. Some people take that risk. I'm willing to risk up to 7k on crypto, but I don't want to risk losing it to a random online-wallet hack. However, if I unexpectedly got 5k out of thin air(say H&R Block found some tax deductions never noticed before) I'd day-trade that and risk losing it to hack. Another problem is that if you make profit on btc-e.com, you now have a bunch of USD sitting there[1] that you cannot transfer out. You don't want to withdraw that USD to your bank account because that's a slow process that takes more than 24 hrs. You're out of the game until all that bank stuff settles. I bought a bunch of litecoins on xmas-eve 2013, then on xmas-day the price suddenly doubled. I had to move my coins out of my offline wallet back to btc-e and sell. I made money, but now I had USD in btc-e that I can't get out. Afterall, I don't want to buy the coins I just sold for profit. I have to wait until the price drops. Now, if btc-e got hacked. The hackers would just buy whatever they could with my funds and withdraw the coins. I've lost. ___ 1. Unlike coinbase.com, btc-e.com allows you to have a fiat balance. I guess think of etrade.com, where you can transfer money out of your bank to etrade. Once those funds are confirmed, you can buy stock instantly because etrade already has your money and doesn't need to talk to your bank again.