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As some one who's almost entirely oblivious to the trappings of cryptocurrency... is it not possible to trade on sites like this with a local wallet? Or do you

As some one who's almost entirely oblivious to the trappings of cryptocurrency... is it not possible to trade on sites like this with a local wallet? Or do you have to keep a balance with them separate from your wallet? It's invalid logic to assume that because some bitcoin sites have been hacked, all of them will be, but at this point it seems pretty clear the entire community needs to be a little more careful. Until that happens I don't think keeping a balance with a service like this makes sense.

mikeash 13y ago
They need to have your money before they can execute a trade from you, otherwise they're opening themselves up for significant fraud. If it's trade-then-send, I could sell some bitcoin, then wait a few minutes to see whether the price went up or down before I send them. If the price went up, just refuse to send the bitcoin, and execute a new sale at the higher price. You can certainly put money in right before you execute a trade, and pull it back out right after. But that introduces significant lag, up to an hour for bitcoin, depending on how many confirmations you wait for, and several days for USD. That said, I don't understand why people keep significant balances in these places. Keep a small amount to trade with and save the rest yourself!
- mildtrepidation 13y ago
  That said, I don't understand why people keep significant balances in these places. Keep a small amount to trade with and save the rest yourself! Yeah, that's what I mean. You can certainly put money in right before you execute a trade, and pull it back out right after. But that introduces significant lag, up to an hour for bitcoin, depending on how many confirmations you wait for, and several days for USD. Thanks, that's definitely something to consider. I can see it being very inconvenient, though I still agree that the idea of keeping a balance larger than your trade volume in a service like this is hard to fathom.
  - mikeash 13y ago
    I can only guess that people have become so used to solid financial institutions that present little risk for deposited money. Even non-FDIC institutions, like stock brokerages, usually have extremely low risk for deposited cash. If you're thinking like that, why not let them hold onto it? It's less effort. Of course, we see the answer to "why not?" here.
naveen99 13y ago
well for altcoin trades, there are options: https://coin-swap.net/ https://coin-swap.net/ https://en.bitcoin.it/wiki/Atomic_cross-chain_trading https://en.bitcoin.it/wiki/Atomic_cross-chain_trading there isn't much volume yet, but i think this is the direction things need to go.

mikeash 13y ago

They need to have your money before they can execute a trade from you, otherwise they're opening themselves up for significant fraud. If it's trade-then-send, I could sell some bitcoin, then wait a few minutes to see whether the price went up or down before I send them. If the price went up, just refuse to send the bitcoin, and execute a new sale at the higher price. You can certainly put money in right before you execute a trade, and pull it back out right after. But that introduces significant lag, up to an hour for bitcoin, depending on how many confirmations you wait for, and several days for USD. That said, I don't understand why people keep significant balances in these places. Keep a small amount to trade with and save the rest yourself!

mildtrepidation 13y ago
That said, I don't understand why people keep significant balances in these places. Keep a small amount to trade with and save the rest yourself! Yeah, that's what I mean. You can certainly put money in right before you execute a trade, and pull it back out right after. But that introduces significant lag, up to an hour for bitcoin, depending on how many confirmations you wait for, and several days for USD. Thanks, that's definitely something to consider. I can see it being very inconvenient, though I still agree that the idea of keeping a balance larger than your trade volume in a service like this is hard to fathom.
- mikeash 13y ago
  I can only guess that people have become so used to solid financial institutions that present little risk for deposited money. Even non-FDIC institutions, like stock brokerages, usually have extremely low risk for deposited cash. If you're thinking like that, why not let them hold onto it? It's less effort. Of course, we see the answer to "why not?" here.

naveen99 13y ago

well for altcoin trades, there are options: https://coin-swap.net/ https://coin-swap.net/ https://en.bitcoin.it/wiki/Atomic_cross-chain_trading https://en.bitcoin.it/wiki/Atomic_cross-chain_trading there isn't much volume yet, but i think this is the direction things need to go.