Is it dangerous to store bitcoin on an Exchange during SegWit2?

Bitcoin Questions and AnswersCategory: General questionsIs it dangerous to store bitcoin on an Exchange during SegWit2?

Humphrey C Gervais asked 1 year ago

As a Newbie, all the advice I’ve seen is do NOT leave your digital currency on an exchange. Instead keep it in a wallet where you control the private keys. However, I’ve just received an eMail from Coinbase about the upcoming hard fork that says in part, “Any user storing Bitcoin on Coinbase at the time of the fork will be credited with an equal amount of the new Bitcoin2x asset on the Bitcoin2x blockchain. No action is required – we will automatically credit your account. If you have 5 Bitcoin stored on Coinbase before the fork, you will have 5 Bitcoin and 5 Bitcoin2x following the event.”
Can I please ask for your advice as to the safety of doing this?
Kind regards

1 Answers
Steven Hay answered 1 year ago

Hello Humphrey,
Well, it’s certainly good advice not to leave your coins on an exchange unless you have a good reason for doing so. There have been enough serious Bitcoin exchange hacks (Mt. Gox, Bitfinex, etc.) to underline the very real risks involved. That said, good reasons for having your coins temporarily on an exchange include trading or getting fork tokens as quickly and easily as possible after the fork. 
I’d say your choice of putting your coins onto Coinbase depends on which personal wallet you use and what that particular wallet’s support will be like for SegWit2x. For example, if you use a Ledger Nano S wallet and Ledger announce in advance of the S2X fork that they’ll support it and have a safe method for splitting your coins (ie. permanently separating your BT2 from your BTC transactions), then it’d probably be safer to rely on your Nano.
If your personal wallet doesn’t announce support for the fork in advance of its occurence and you really wish to claim S2X tokens as quickly as possible (which is reasonable, as price may decline rapidly as more people gain access to these tokens), then Coinbase *should* be safe. This exchange has a good track record of safety after all, though I would point out that if something were to go wrong, it’s more likely to go wrong around the time of a significant event like this fork, for technical and volume reasons.

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