This means you cannot use an exchange wallet as your main wallet, receiving and sending funds directly from it. When you deposit and withdraw from an exchange you must first send to a specific wallet, or sign a message from that wallet.
It has many privacy and usability functions, it's a hassle, and it is done mainly to "protect" the exchanges. At the expense of users, of course.
Viewed neutrally, this could be a good initiative and force users to manage their coins more carefully. Many people still use exchange as a wallet today, which is wrong, and all for the reason of saving a small fee for an additional transaction.
Of course, a lot of folks are going to get irritated as fuck by these kinds of attempts to list clean addresses or clean wallets, and my past practice has been to attempt to keep track of which funds I am withdrawing from exchanges in order to deposit back to the exchanges from the same wallets, but still adding one more verification step is likely going to be a pain in the ass...
I guess there could be guys who had not been keeping track of their UTXOs, and they still might be able to go back and improve their records, to the extent that they might be able to trace some of their transactions.
So for example, I tend to treat all exchanges similarly, so I might have one wallet that has several addresses, but they are transactions from various exchanges, and so I know that each one came from one of the exchanges or another, and so if I deposit back to the exchange, then I would take from one of those already known addresses first... and I suppose if at some point I run out of bitcoin from those addresses, then I would start to take from other addresses that I know or at least that I am able to figure out from where I got the bitcoin... but yeah, exchanges are likely going to be gathering way more information than they need, and much of it will be unnecessary, and perhaps even theatrics, but surely at the same time, some individuals are likely going to get fucked over too when their transactions might get rejected or even locked.
This means you cannot use an exchange wallet as your main wallet, receiving and sending funds directly from it. When you deposit and withdraw from an exchange you must first send to a specific wallet, or sign a message from that wallet.
It has many privacy and usability functions, it's a hassle, and it is done mainly to "protect" the exchanges. At the expense of users, of course.
Viewed neutrally, this could be a good initiative and force users to manage their coins more carefully. Many people still use exchange as a wallet today, which is wrong, and all for the reason of saving a small fee for an additional transaction.
We are wrong if we hope that evolution comes from studying and self-progress.
We move down the line of knowledge because it helps us solve some needs.
So yes, it is an effective way of teaching many users coin control and basic privacy features (address reuse).
You might be right here.
Hopefully it also incentivizes some of us to attempt to create circular economies too, so that we don't have to go through exchanges and/or banks in order to purchase/sell goods and services. I would like to find some folks who I could buy eggs, milk and meat.. and perhaps at the same time interchange other goods and services without going through third party services.