Unpopular Opinion on Crypto Exchanges

Unpopular Opinion on Crypto Exchanges

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  1. There are plenty of recent examples of people losing crypto stored on exchanges that could’ve been prevented had they owned their keys. I’ve seen multiple threads on Reddit recently of people losing their holdings due to shared password leaks, and there was that recent spontaneous >80% dip in ADA and ETH on Kraken that triggered stop losses and screwed up leveraged positions.

  2. A lot of large exchanges are in the process of becoming the financial institutions of the future. To make the final hurdles into true mainstream adoption they will have a fiduciary responsibility to offer insurance for assets held on their exchanges.

    A Mt. Gox level hack, while still possible in nature, won’t produce the same kind of losses ever again. (Spare me the never say never caveat)

    Mt. Gox is to crypto as Chernobyl is to nuclear energy. It’s memory is unforgettable but unlikely to reoccur.

    I have always exercised the not your keys not your coins modus, but as we chug a long it’s consequences seem to lessen.

    You still need to do your due diligence, protect yourself from scams etc. However, no matter what path to custody people choose there will always be outliers.

  3. It’s way less risky than it used to be, but it’s still more risky than non custodial wallets. If you’re hodling, pulling stuff off an exchange makes sense. If you’re trading and have a greater liquidity need, leaving funds there makes sense.

  4. I used Cryptopia back in 2017. Now that I think about it, it was way too easy to sign up and start buying because during the rush all the other exchanges were not in a hurry to get new people verified. Shame they got hacked, lost a few grand. If something seems off, follow your gut. But I do think some of the bigger exchanges are more reliable. But why risk it? Why not just get a hardware wallet?

  5. It all depends on risk tolerance – you’re effectively trusting the exchange to hold your money. In some cases, that could be more secure than someone new to the crypto space and not having the best security practices.

    At the end of the day, education around the risks and best practices in crypto is probably a good solution to this.

  6. I believe in the long term you should absolutely go for your own wallet etc. But for a start? Especially for people not investing thousands of dollar?

    They need to look at the withdrawl fee first and then consider what they want to do with their small investment. I dont know about other exchanges, but the hated binance does indeed offer good options to stake / invest what you have there with little effort.

    Not great for the long run, not perfect for the whole system – but as a starting point?

    I’d rather play nano fetch with a friend for a few weeks to get them comfortable with ‘what is a wallet, how does it work, why do I need to be careful, how do I transfer’ while their 50$ buy in crypto lies with an exchange. You walk before you run.

  7. I wonder what the stats are from the recent cold storage phishing campaigns. I bet more people got suckered into losing their entire ass than have lost on legit exchanges.

  8. Well… kinda yes kinda no.

    A few years ago even the biggest and best exchanges were pulling exit scams, getting hacked, freezing withdrawals and charging ridiculous exchange fees.

  9. This is clearly the perspective of someone who hasn’t been around long enough to watch “large well-known” exchanges turn out to be poorly run or flat out scams and disappear over night. It can happen anytime, anywhere to anyone

  10. The thing is, large exchanges are constantly being targeted at all times, and if somehow they manage to get the keys or hack the exchange and fuck it up in any way, you will be affected by it.

    However, if you hold your crypto in a hardware wallet and you keep your mouth shut, it’s pretty much impossible that anyone targets you even if you have hefty amounts of money.

    It’s very safe to keep the coins on an exchange, yes. However it’s safer to keep them yourself and as long as you stick to the right way of doing the things, you will not have any kind of issue.

  11. I think a lot of these big crypto exchanges MAKE so much money as well as have proper storage that even if a loss did happen, most of them would cover the loss. Think Coinbase, Binance, Geminin etc. It’s the smaller exchanges and places like Robinhood / []( where you can NEVER access your coin is where I’d be afraid of.

  12. This is basically what I tell new people who ask about Coinbase because of the negative stuff they’ve heard. Coinbase is fine for a large demographic. That doesn’t make people keeping everything in cold storage wrong, either. I’m in between, myself.

  13. I feel safer having them stored in an exchange like binance, I wouldn’t be able to live with myself if I would loose an hardwallet or just even worst loosing my seed. If I get stolen it will be very bad but at least I delegated the responsabilty so it will be easier to live with that. Still I don’t have that much invested that would make me kill.myself

  14. There’s also the risk of losing your keys or fucking something else up when you have everything in a private wallet.Of course no one has ever done this /s What is more likely exchange is hacked or someone miss places their key or recovery phrase? Also benefit of having on exchange allows you to trade and not get fucked by transaction fees switching coins back and forth which can be good for some people. I don’t think its a simple as one is always better. There is pros and cons to both. Personally my holdings are on a ledger ATM but depending on the market we are in I keep on exchange sometimes.

  15. I disagree and you are missing the main part of the argument. The actual reason both banks and larges CEX aren’t respected in crypto is because they both require third party trust to begin with. Crypto has the capability to be trustless so they don’t even have to exist. The issue of risk with your own funds is a real one though and not to be taken lightly but I disagree with your statement sir

  16. Not saying it’s not risky but still:

    I can loose my wallet, my private key etc. as well and it’s much easier for anyone to crack my security than the one from a large exchange (of course they are not looking for small fishes but still). Most of the large exchanges do not store all their crypto at the same place (physiclly but also digital) and an attacker wilm (in most cases) not be able to steal all of it.

    Not owning the private key is the same as giving your money to a fiat bank.

    Large exchnages have been hacked and destroyed. Same happened to fiat banks.

  17. Hooo boy been rekt on two exchanges and they’ve gotten better since the old days but not your keys, not your coins. You may be right if you’re lucky, but if you’re wrong, it takes years to resolve a bankruptcy.



What do you think?

The Le Iene report “Inside the Bitcoin mines”.

The Le Iene report “Inside the Bitcoin mines”.

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