What happens if a company or exchange collapses?

[unknown]

Say I use Bitstamp to buy a crypto and tomorrow they go bankrupt.

Do I lose my investment?

And the Korean exchange that recently collapsed, how did that affect investors?

 

[Schifference]

Crypto is perfectly safe. Nothing could go wrong.

 

[kpitcher]

Think of bitcoin like cash. If your bank goes under, the money in the bank is gone. (Let's ignore insurance for the moment). If you had withdrawn your money it's still under your mattress.

Now some places do insure their customers. Coinbase does, I'm not sure about bitstamp or others.

Some of those exchanges people keep coins on for trading purposes. Unless they are insured, which is unusual, then it's a risk to consider. The korean hack probably caused some people to lose crypto.

If you are buying bitcoin and don't plan on using it right away then it's often best to transfer your coins from a bitstamp to something you personally control. This ensures safety.

 

[Zippyjuan]

Crypto is perfectly safe. Nothing could go wrong.

Never. Mt Gox. Or this one just a couple of weeks ago:

http://www.businessinsider.com/cyberattack-brings-a-cryptocurrency-exchange-to-its-knees-2017-12

A South Korea-based cryptocurrency exchange was brought to its knees by a cybersecurity attack.

Yapian, the operator of crypto-exchange Youbit, halted trading of cryptocurrencies on its venue Tuesday and filed for bankruptcy after a hack, according to reporting by The Wall Street Journal.

The Journal reported the exchange had 17% of its digital currency holdings stolen. The company witnessed a similar attack in April.

The crypto world has seen its fair share of hacks and cyber issues. Most notably, Mt. Gox, a Japanese cryptocurrency exchange, was forced to declare bankruptcy in 2014 after a hacker moved hundreds of thousands of bitcoin from the exchange to his own account.

And earlier this year, an estimated $280 million worth of the cryptocurrency ether was locked up by crypto-wallet company Parity because of one person's mistake. An unidentified user accidentally deleted the code library required to use recently created digital wallets within Parity, according to a security alert posted on the company's blog in November.

 

[oyarde]

Say I use Bitstamp to buy a crypto and tomorrow they go bankrupt.

Do I lose my investment?

And the Korean exchange that recently collapsed, how did that affect investors?

Unless you are insured you lose everything .

 

[Crashland]

If you're lucky, the exchange might be able to raise additional money from investors to pay back customers (see what happened with NiceHash). Otherwise there might be a class action suit where you might be able to recover a fraction of the funds.

Bottom line - don't store crypto assets on exchanges. If you don't have the private keys you don't own the coins.

 

[dannno]

Never. Mt Gox. Or this one just a couple of weeks ago:

http://www.businessinsider.com/cyberattack-brings-a-cryptocurrency-exchange-to-its-knees-2017-12

Are you not aware that Mt. Gox was sued and paid out some settlements to customers?

 

[dannno]

Keeping crypto on exchanges does carry some risk, Ledger S Nano and Trezors make good hardware wallets.

 

[specsaregood]

If you are buying bitcoin and don't plan on using it right away then it's often best to transfer your coins from a bitstamp to something you personally control. This ensures safety.

personal control by no means "ensures safety". It simply transfers the responsibility for keeping it safe from others to yourself.

 

[CCTelander]

With cryptocurrencies you have to accept full 100% responsibility for your own assets. Imagine that. Having to accept personal responsibility for something in this day and age. People aren't used to that, even in the so-called "liberty movement."

 

[kahless]

Are you not aware that Mt. Gox was sued and paid out some settlements to customers?

They have not paid out anything, it is still up in the air and I doubt I will get my money back. I posted about my experience with mt.gox here on 1-20-2014 and they went out of business a month later. http://www.ronpaulforums.com/showthread.php?441856-My-Bitcoin-mtgox-experience-alternatives

This was when they handled 70% of all bitcoin transactions worldwide. The news media at the time would talk about mt.gox like they were a PR arm for them so there was no indication they were going to go out. What I described in that post is typical of how some of the exchanges are out there right now.

I thought I would simply transfer money from bitstamp to mt.gox for a week and transfer it back out. Never got it back.

I am not trying to dissuade anyone from investing but lets not sugar coat the harsh reality that it is a significant risk. Be prepared to lose everything you have invested as if you are gambling.

 

[William Tell]

Crypto is perfectly safe. Nothing could go wrong.

Then one day there was a solar flare.........

 

[kpitcher]

Then one day there was a solar flare.........

If there is a solar flare that takes out the entire worldwide internet and the bitcoin blockchain, we'll be living in the world without anything modern. I'm going to assume guns, ammo, and food will be the currency of choice then. Everything of value will be worthless if you can't eat.

 

[unknown]

Think of bitcoin like cash. If your bank goes under, the money in the bank is gone. (Let's ignore insurance for the moment). If you had withdrawn your money it's still under your mattress.

Now some places do insure their customers. Coinbase does, I'm not sure about bitstamp or others.

Some of those exchanges people keep coins on for trading purposes. Unless they are insured, which is unusual, then it's a risk to consider. The korean hack probably caused some people to lose crypto.

If you are buying bitcoin and don't plan on using it right away then it's often best to transfer your coins from a bitstamp to something you personally control. This ensures safety.

For example, this Ripple, there are a few companies linked off their site which trade the coin.

Its taking forever to open an account but once I do, and buy the goddam thing, could I then transfer the coins to my own "wallet"?

 

[specsaregood]

For example, this Ripple, there are a few companies linked off their site which trade the coin.

Its taking forever to open an account but once I do, and buy the goddam thing, could I then transfer the coins to my own "wallet"?

Yes.

 

[unknown]

Yes.

Would you be able to or mind providing more specific guidance?

 

[Mordan]

personal control by no means "ensures safety". It simply transfers the responsibility for keeping it safe from others to yourself.

oh the god damn personal responsibility

 

[devil21]

For example, this Ripple, there are a few companies linked off their site which trade the coin.

Its taking forever to open an account but once I do, and buy the goddam thing, could I then transfer the coins to my own "wallet"?

You're testing the banker's globally tracked currency system so there's a lot of databases your personal info has to be propagated to around the world. Be patient. Registering yourself as a global citizen will be much quicker once the bugs are worked out and their global currency is officially rolled out.

 

[dannno]

You're testing the banker's globally tracked currency system so there's a lot of databases your personal info has to be propagated to around the world. Be patient. Registering yourself as a global citizen will be much quicker once the bugs are worked out and their global currency is officially rolled out.

Let's say it's ripple, since that is decentralized and far easier for them to control.

Ok, I'm going to use bitcoin instead.

 

[devil21]

Let's say it's ripple, since that is decentralized and far easier for them to control.

Ok, I'm going to use bitcoin instead.

You don't get it, do you? Bitcoin and Ripple and all the rest essentially communicate with each other. The entire purpose of the exchanges is to study and hone how to track interactions between various blockchains so all transactions around the planet can be 100% logged, identified and tracked. The notion that you are trading one "coin" for a different "coin" is idiotic. There is no coin. There are only records of interactions on a single chain and interactions between multiple chains across the planet. And you all are doing the testing for them.