Decentralized technologies require a definitely decentralized approach. Bitcoin will never be truly independent until they untie himcentralized system. We will not get rid of the problems that regularly shake the entire industry until we implement a solution that can compare with the invention of Bitcoin itself. Perhaps the technology of atomic swaps and a competent approach to the storage of cryptocurrency assets will correct the situation in the future, in view of the constant evolution of software and methods, although you can already take a serious step into the future. If you still store precious bitcoins on regular exchanges - you can be sure that for a long time there are not even half of the total customer deposit. How so? Read on.
Exchanges like Bittrex, Bitfinex, Coinbase,Kraken, Binance, BitMex, OKEx, Huobi, Poloniex and others have long become a byword and personification of cryptocurrency evil for many traders and just wanting to join the popular trend by buying some coins in reserve.
Problems of centralized exchanges
On traditionally centralized exchanges, a trader often receives a standard headache package.
Withdrawal Issues, and, moreover, not only in fiat. Under any pretext, they try to delay the issuance of your own money or not give it away at all. Have you ever wondered - why are there any restrictions on withdrawals on exchanges? Indeed, in theory - how much they brought to the exchange, how much it is able to give back without delay, minus the commission. But, the option only works in the speculative model of someone’s utopian world. In fact, there is a limitation on average of 2 BTC, and what is required from above requires a verification procedure that only seems simple in appearance. And if we are talking about an amount in excess of 100 BTC - you will need to personally call the company’s office and arrange for such an impudent operation.
And there are guarantees that US government agentsonce again did not squeeze out half of the funds from this exchange? Or the founders did not spend them on their own needs? After all, what you see in the trading terminal is just the numbers on the balance sheet. The coins themselves are mixed in hot exchange wallets, and some are sent for cold storage. And not all addresses of these wallets are publicly known. And there are no guarantees that if all traders demand their funds at once, the exchange will really be able to satisfy all applications and will not burst like an average bank. They simply may not have this money, because the lying founder lost them on another exchange, as an example - the infamous QuadrigaCX.
Freezing funds - allegedly due to violation of KYC procedures (know yourclient) and AML (anti-money laundering). Now there is one more reason: if your country is subject to US sanctions, they can absolutely rightfully take your deposit away if you had the imprudence to “light up” the real IP address. In theory, you should receive them anyway, but, in fact, many traders complained that they did not see their money.
And an additional question: why is an exchange that operates under offshore jurisdiction on the outskirts of the world subject to the requirements of American politicians? It is sad, however.
Hacker attack - a very common version of the legaltheft of funds from their own customers. There is no guarantee that the founders themselves did not steal this money, and then did not shrug their hands, citing "evil Russian hackers." As an example - MtGox, Bitfinex, Binance and a dozen and a half dozen extremely famous cases. An ideal way to cover any losses.
And finally, the most banal kind of precedent - excit scam. Just one day you see instead of a pageEntrance to your favorite exchange is a stub with the wishes of a long and happy life, in which money is an absolutely secondary element. And you can see the stub from the US government, as is the case with BTC-E. They noticed - how much this “US government” is everywhere, even too much.
Additionally, you must understand that by making a transfer to the exchange address - you lose control of your own means. You can only hope and believe that everythingwill manage safely. You do not have a private key for this wallet, and if the exchange wants to take these coins, then it will do this using one of the above methods.
There is only one way out - to take control of finances in your own hands. Yes, many are not used to answering for this, and trust anyone - a bank, a stock exchange, a fraudulent fund, but not themselves.
In addition, many earn a livingexclusively by speculative trading (or trying) and can not do without an exchange that instantly performs internal operations and allows you to trade with an excessively large leverage.
This coin has a downside, becausejust like forex kitchens or binary options brokers, cryptocurrency exchanges abuse their privileged position by trading against their own clients or making money to liquidate their positions.
As an example, the BitMEX exchange allows trading with a hundredfold leverage. CryptoMedication researcher wrote about the methods of this entertainment institution:
Cryptomanipulations: how scammers clean your pockets
After a debate with a famous cryptocurrency criticNathaniel Rubini, the head of BitMEX, Arthur Haines, said that trading is an entertainment business, which, in fact, meant recognizing your exchange as nothing more than a banal casino.
I agree that speculative trading is verycontroversial phenomenon. After all, earning on the difference in course - the trader makes money from the air. He does not produce anything and does not provide useful services, he only consumes, having mastered the cunning way of receiving funds. And if one succeeds, then others become victims of cryptocurrency casinos.
Yes, in this world there are a lot of currencies, both in fiat and digital forms, so the exchange is simply necessary. But, it is one thing to exchange funds out of necessity, and another is to earn money on speculation.
For the former, there are already suitable options that allow you to control your funds, and remove the bulk of the risks inherent in centralized sites.
And the second thing to think about is whether they are right.do they trade against their fellows? After all, if one took with a profit, the other lost a part of the deposit. This question is not directed to professional players - this is information for reflection for those who are just going to play with aces, having an extremely meager supply of knowledge, endurance and financial savings.
I'm not trying to put pressure on the conscience of experienced traders- After all, this is really nothing more than a game, albeit a terribly hazardous one. Is it possible to blame poker players for making a profit in the form of legitimate winnings?
Essentially, when you put funds into the exchange,have acquired an asset and are waiting for its growth - you challenge other players, primarily the exchange itself. And people like me and my kind - we accept the offer to play. And, as a rule, the beginner loses. Almost an axiom. Does he have anything to blame for other traders? After all, he wanted to get their money, but, in fact, lost himself.
Will we play? If you want to feel yourself in the role of stock meat - please, they are always waiting for such people here, and they have set many attractive traps for them throughout the Network. On every forum, site and in the telegram channel, wherever there are hotheads who are ready to take risks, and often the last one.
If you have not learned how to spend money onexchange, then you will be happy to learn. Moreover, pay for the courses from your own pocket. Well, or read the channel of the next "mother's trader" in Telegram - he has already made a fortune on this, or for a penny reward he directs the flow of "clients" to the exchange trimmed platforms.
Therefore, I see the main problem of the new arrivalsto the industry, which, by and large, feed it - in the desire to earn easy money through trading or mining. After all, when they understand that exchanges simply play with them smartly, and an expensive mining farm does not mine, because they are not able to compete with industry giants, it is too late. Money is irretrievably lost, and only bitter sediment and disappointment remain in the soul, often in combination with considerable debts. But, each, especially an adult, is himself responsible for his actions, getting involved in someone else's game, where he is in a disadvantage in advance. The main thing is that he should be aware of this!
CEX OR DEX?
The logical question is what to do. I did not mention the peculiarities of purely speculative trading for nothing - because without CEX (centralized exchanges) it would not have existed for a year. DEX (decentralized exchanges) are not yet able to provide quick and convenient tools for traders. In addition, DEX will not allow you to keep the cryptocurrency rate at the required viable level and smooth out excessive volatility. Yes, no matter how regrettable it may sound, but the cryptocurrency rate is an extremely artificial thing, and without proper management this market is not able to exist.
Read more about cryptocurrency exchange rate manipulation methods:
Pump & Dump: how BitNews manipulate your mind
At the same time, the owners of the cryptocurrency exchangestructures (and all exchanges are somehow connected with each other) receive fabulous profits by skillfully pulling at the necessary threads. And stablecoins like Tether allowed them to gain even more power:
[Dark_Block]: Meet Tether “Printer” Ltd
[Dark_Block]: Meet - Crypto Capital
Therefore, if you want to trade for a living - start as a rule:
- Do not hold funds on exchange wallets
- Work with multiple exchanges
- Do not risk the amounts that you cannot afford to lose
For those who simply need to exchange one currency for another, even if the amount is quite serious, it is recommended to use DEX (for cryptocurrencies) or P2P exchangers (for operations with fiat).
Yes, it will take more time (and that is not a fact),but the option is more reliable, because smart contracts allow you to get rid of the intermediary in the form of an exchange, and P2P exchangers, as a rule, are less prone to hacking and do not require burdensome verification from users.
The main thing is that both for speculators and forFor ordinary crypto enthusiasts, there is one rule that should not be violated - you need to keep cryptocurrency in your own wallets, and do not trust this honor and responsibility to anyone.
This characterizes the very concept of Proof of Keys, for the sake of lighting of which this material was created.
Private Key Ownership Examples
The most striking example is the officialBitcoin Core client. And it’s not necessary to download the entire blockchain - you can immediately set a limit of 2 GB. Yes, it will not be a full-fledged full node, but it will give confidence in the safety of funds.
For reliability, you can screw an additional "reinforcement" in the form of an over-client. But, this is a whole instruction, and if you want to see it on the pages of this publication - leave + in comments.
And the easiest option is to just pick up the filewallet.dat from the folder with the client installed, using it only if necessary, or forming transactions offline with the Internet turned off. This is especially convenient if you pay a large amount in bitcoins.
Although, in my opinion, HODL (long-term storage) is for two types of cryptans:
- Madmen or adventurers - for some reason, confident in the indispensable growth in the next 10 years. Perhaps they read the prediction of Nostradamus or went to a fortuneteller;
- Insiders - Those who created Bitcoin and run the cryptocurrency industry are probably aware of its future fate.
By the way, a couple of sensible decentralized platforms have already been launched to trade bitcoins with the help of the Lightning Network, but LN and other things will be written in the next article.
If you do not want to participate in the development and support of the Bitcoin network (which is typical) and, especially, do not even think about HODL, you can use the lightweight Electrum client.
Install and use the “lightweight” Electrum wallet
For lovers of alternative Bitcoin optionsThere are also official clients that allow you to store private keys yourself. This is a must for every cryptocurrency that claims to kill all competitors. If of software does not work as it should - avoid this shield.
By and large - Bitcoin has no worthycompetitors. For one simple reason, the lack of proper decentralization. With this, there is a problem for the very progenitor of all coins and coins, not to mention his clones, "more perfect" similarities and undersets.
If the crypto coin does not have enough nodes forto the whole world - this is a digital fiat. Also with forks, such as Bitcoin Cash, which at first pompously separated from the main Bitcoin network, and then it fell into two parts, and now it’s not clear at all what kind of “miracle” of technological thought claims to be world dominant. Tin.
So the best option: Bitcoin Core (for storing a serious amount), Electrum (for regular payments, for example, with a provider, hoster, employees or partners), DEX (for crypto-crypto exchange), P2P-exchange (for crypto-fiat exchange or vice versa). And leave centralized crypto-casinos to professional cheaters. Believe me, the course will not suffer from this at all, you still don’t really influence it (so that the media do not inspire you), they draw to you what you should see. In general, CEX is for supporting Arthur Haines' course and pants, and DEX is for fair exchange. Own the keys to your own well-being, sleep peacefully.
You just have to take care that your funds do not become the prey of real hackers:
After all, if you do not go to the exchange, then, often, it comes to you. Bitcoin is an open database where your IP address and balance status are known not only to you.
Posted by: Ne-Standart