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Thread: A reminder that it's a bad idea to leave your Bitcoins in an exchange wallet

  1. #1
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    Default A reminder that it's a bad idea to leave your Bitcoins in an exchange wallet

    https://gizmodo.com/crypto-exchange-...lie-1832309454

    Exchange wallets are certainly convenient. But if you leave your Bitcoins in an exchange wallet, you don't really control the Bitcoins it contains. Users of Canadian crypto exchange QuadrigaCX were reminded of this fact when the exchange announced that they no longer have access to their Bitcoins (and other crypto-currencies) because the founder of the exchange died and he took the password(s) to the grave with him. Customers are out $190 million.

    Keep your Bitcoins and other crypto-currencies in a personal wallet, not in an exchange account or wallet.

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    Quote Originally Posted by dtek View Post
    https://gizmodo.com/crypto-exchange-...lie-1832309454

    Exchange wallets are certainly convenient. But if you leave your Bitcoins in an exchange wallet, you don't really control the Bitcoins it contains. Users of Canadian crypto exchange QuadrigaCX were reminded of this fact when the exchange announced that they no longer have access to their Bitcoins (and other crypto-currencies) because the founder of the exchange died and he took the password(s) to the grave with him. Customers are out $190 million.

    Keep your Bitcoins and other crypto-currencies in a personal wallet, not in an exchange account or wallet.
    You have to be kidding me. The guy with the password dies and 190 million is at stake? I can see attorneys running from miles away...
    Counting on someone else for your happiness is a recipe for premeditated disappointment.

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    Quote Originally Posted by Artknowsme View Post
    You have to be kidding me. The guy with the password dies and 190 million is at stake? I can see attorneys running from miles away...
    Yeah, I wouldn't believe it if it wasn't all over my news feed. The exchange is obviously headed for bankruptcy, but there's no FDIC-like insurance that I'm aware of for crypto-exchanges. The customers are going to take a bath no matter what happens.

    EDIT: It gets better (or worse, depending on your point of view). There are now suggestions that the exchange founder may have faked his own death to abscond with the Bitcoins: https://futurism.com/growing-suspicion-crypto-ceo-faked-death/
    Last edited by dtek; 02-06-2019 at 05:13 PM. Reason: Additional information
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    Quote Originally Posted by dtek View Post
    Yeah, I wouldn't believe it if it wasn't all over my news feed. The exchange is obviously headed for bankruptcy, but there's no FDIC-like insurance that I'm aware of for crypto-exchanges. The customers are going to take a bath no matter what happens.

    EDIT: It gets better (or worse, depending on your point of view). There are now suggestions that the exchange founder may have faked his own death to abscond with the Bitcoins: https://futurism.com/growing-suspici...o-faked-death/
    I see a straight to video movie in the works. I kinda hope its true and he did fake his own death...makes it so much more interesting. Thanks for the update too!
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    Counting on someone else for your happiness is a recipe for premeditated disappointment.

  6. #5
    So he’s dead and rich!!! I only want to be one of those.......
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  7. Couldn't agree more. Third party wallets are vital to your bitcoin protection. They also provide a layer between the exchange and the next transaction, which is helpful at times. If you aren't using a third party wallet, but do use bitcoins, I strongly encourage you to get one.
    Helpful Dusk1983 Rated helpful
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    I’ll have to look into this (I’m very new to Bitcoin -having only made one transaction via the Coinbase platform). So if say I have £100 worth of Bitcoins in my Coinbase does that mean I should move it somewhere else or would they be classed as a 3rd party wallet? Sorry I’m still naive to the whole cryptocurrency thing.

  9. #8
    Quote Originally Posted by Dusk1983 View Post
    I’ll have to look into this (I’m very new to Bitcoin -having only made one transaction via the Coinbase platform). So if say I have £100 worth of Bitcoins in my Coinbase does that mean I should move it somewhere else or would they be classed as a 3rd party wallet? Sorry I’m still naive to the whole cryptocurrency thing.
    First, regardless of what any member may claim we have no idea what is best for you.
    however, conventional wisdom and personal experience with CB is to get a wallet to use as an intermediary between CB and the destination. Some find value in "tumbling" where i, not be a frequent user consider this a bit more than necessary (learning curve/fees). in my op-ed, a wallet that I control to the extent that is possible is suitable. a desktop wallet such as electrum (you download the portable executable and run the new wallet). Use that for instance as the middleman and whatever you have left over stays right there. For my part, buying strictly what you need for the transaction with a little wiggle room for exchange/transfer fees works well so i'm not vulnerable to whatever the market does between uses. Also i'd have a backup plan in the event CB takes exception to your lifestyle let's say. being in the UK opens a lot more choices in xbt purchasing than we have in the US. we, us in the US really don't care for anything with a crypto as a prefix but let's not get going down that road.
    Helpful Dusk1983, pinkflower Rated helpful

  10. One thing to consider if you decide to go with an online wallet (there are pros and cons to each, it's a preference) is how much information they collect about you. Obviously CB needs everything to handle the finances and reporting to the feds, but a wallet is just a place to hold the coins, so they don't need much information. I went with BitGo because they have a decent mix (in my opinion) of security and anonymity. This way I can access from my mobile and other devices, where an offline wallet is restricted to that device. (but safer )
    Helpful Dusk1983 Rated helpful
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  11. Agreed until your personal wallet gets hacked like the recent Electrum episode....Consider hardware or paper for best security
    Helpful Carter Rated helpful
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  12. #11
    Quote Originally Posted by Funkyfish View Post
    Agreed until your personal wallet gets hacked like the recent Electrum episode....Consider hardware or paper for best security
    a few things to consider:
    1. if you have a desktop wallet, keep it updated, like any other piece of software on your machine.
    2. if an entity obtains access to it, as i mentioned above, keep your balance as close to zero as you reasonably can. Mine for instance wasn't accessed during the inevitable and endless nefarious actors committing the usual illegal activities. if they had their haul would have been 15 bucks. the actual vulnerability effectively is during the transfer from the point of purchase to where you store or send it. It's generally not when you open your application you find a zero balance.
    3. if you are an infrequent user with low amounts how much money are you willing to invest in securing whatever amounts for an hour or so? myself, none. but to each their....
    Helpful pinkflower, Zenak, Carter Rated helpful
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  13. Quote Originally Posted by wildings View Post
    a few things to consider:
    1. if you have a desktop wallet, keep it updated, like any other piece of software on your machine.
    2. if an entity obtains access to it, as i mentioned above, keep your balance as close to zero as you reasonably can. Mine for instance wasn't accessed during the inevitable and endless nefarious actors committing the usual illegal activities. if they had their haul would have been 15 bucks. the actual vulnerability effectively is during the transfer from the point of purchase to where you store or send it. It's generally not when you open your application you find a zero balance.
    3. if you are an infrequent user with low amounts how much money are you willing to invest in securing whatever amounts for an hour or so? myself, none. but to each their....
    Also keep it BACKED UP! Can't have a hard drive crash break the bank. (another reason I went online, I know I'm lazy about back ups)
    Helpful wildings, pinkflower Rated helpful

  14. #13
    Quote Originally Posted by Funkyfish View Post
    Agreed until your personal wallet gets hacked like the recent Electrum episode....Consider hardware or paper for best security
    I can't believe how much the previous versions of Electrum were so lax with regard to allowing unauthenticated new "servers" onto the network -just a hostname that resolved to an IP address, and you could join the ElectrumX network as a payment gateway for wallets.. 70% of these servers were bogus at the peak of the hack, probably mostly just Python scripts sending out the fake update notification that fooled people into downloading the malware that emptied their wallets.

    I'm just glad that I wasn't a victim, I might've also fallen prey in a moment of haste.

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    UPDATE:

    Well they managed to crack the laptop that contained the wallets with the exchange customers' bitcoins (A laptop with everyone's wallets! Could this operation have been more amateurish?). Turns out that those wallets were empty by the time the company regained access. This is looking more and more like the exchange owner faked his death and stole his customers' coins.

    More details here: https://markets.businessinsider.com/...9-3-1028009684

    Don't keep your bitcoins in an exchange wallet!
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    I've lost money from a failed exchange

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    Quote Originally Posted by HangProgram View Post
    I've lost money from a failed exchange
    Moi, aussi. Makes me very unlikely to try using another, unless/until there is another option that has MUCH better security for the "casual" user. I probably could use a much more secure and sophisticated combination of systems, but TBH, I really can't be bothered to spend the time and effort required to do such, not to mention the expense. I don't do that many transactions that would justify (much less require) BC, and I hope to never have to do so. I guess I'm not a "true believer" in electronic-based currency, so if it's not both easy and relatively reliable/secure, I'm just not that interested. Pffft.

  18. My experience with BC was horrible and costly money wise.I don't know a good way to pay a vendor.Do you? If you would be so kind please let me know what works. Thank you. S

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    Quote Originally Posted by scorpigoh View Post
    My experience with BC was horrible and costly money wise.I don't know a good way to pay a vendor.Do you? If you would be so kind please let me know what works. Thank you. S
    Here's a poll and pretty good discussion on payment method preferences. What is your preferred method of payment?

    I assume your bad experience was not receiving whatever you were buying. I really don't know any perfectly safe way to pay since COD is basically a thing of the past.

    Back on topic, I've used Electrum on my laptop for 3 or so years. I do have S/W backups in my firesafe and a hardcopy in a safety box with instructions, the Wallet seeds, and password for whoever gets there first when I keel over. It's not enough to buy a house or even a car. Maybe a new TV at Walmart, so I don't worry about it too much. I keep my version of Electrum updated, checked it last week and all was well. I realize the wise thing to do as was already pointed out to go hardware wallet for significant amounts of coin.

    I haven't been around much recently and didn't realize there had been an "Electrum Heist/Hack".
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  20. #19
    @Carter, Wallet Seeds? Are you growing Petunias?

    I wish I understood BC, but in a way happy I haven't learned it.

  21. A reminder that it's a bad idea to leave your Bitcoins in an exchange wallet

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