The bear market has caused several bankrupt crypto exchanges, causing many people to lose a lot of money. Fortunately, there is a solution for this: you can store your coins yourself in hardware wallets. But self custody isn’t for everyone. Binance CEO Changpeng Zhao, also known as ‘CZ’, thinks that only 1% of crypto investors can manage this.
Bitcoin self-custody also has many risks
CZ was recently heard at a Twitter Spaces meeting. Here he stated that cryptocurrencies are stored in your own wallet, which you are responsible for yourself Private Keys, is not for everyone. This is because ‘not risk free’. 99% of investors who choose this will lose more than if they kept it on a centralized exchange.
A commonly used form of ‘self-custody’ is storage in a hardware wallet. This is a physical device on which the cryptographic keys are stored, a bit like a hard disk. You should therefore also store this device properly.
“Most people lose their [hardware] wallet, or they don’t have a proper backup of their security keys. [Vaak] are they not encrypting their backup properly or are they just writing it down on a piece of paper. [Als] someone else sees it, they can steal the money,” the CEO emphasized.
Even if the coins are properly stored, sudden death can be a problem. Often they are then not prepared to pass them on to relatives. Binance, on the other hand, has standard operating procedures for this, according to CZ.
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— Binance (@binance) December 14, 2022
“Binance is neutral”
However, he emphasizes that it is not a sales pitch to place customers’ assets with Binance. In recent days, many investors have withdrawn their money from the crypto exchange. Namely, it would recycle clients’ funds to offer leverage to other clients.
Binance is neutral in the different storage options. Therefore, it offers customers the option of both leaving the tokens on the exchange and withdrawing them. “Different solutions have different risks,” he illustrated.