As crypto matures, there is a lot more information available about consumer protection, especially due to the number of scams and thefts that have occurred in the industry in the past. They are also certain things that have become commonplace knowledge as well as go-to guidelines for crypto users and one of these is the storage of cryptocurrency itself. At this point, it is a rule of thumb that individuals should not store their cryptocurrency on crypto exchanges and instead should invest in cold or hot wallets to make sure that their digital currency is safe and secure.
However, according to Changpeng Zhao, the CEO of Binance, this might not be the case as a recent Twitter exchange with the CEO reveals that he believes that cryptocurrency is safer on a crypto exchange than on cold wallets.
This whole saga began with Peter Schiff, who is a famous crypto critic and a supporter of gold as an investment. He had stated that he had lost his cryptocurrency by losing access to his cold wallet and this brought on the phase SAFU which is commonly used in the crypto industry to denote safety.
“Many hardcore crypto [organizations] advocate storing your own keys. But the truth is, today most people are not able to secure a key even from themselves (losing it). A trusted centralized exchange is #SAFUer for most people. The numbers speak for themselves. Need to work on wallets,” Zhao tweeted.
According to CZ, a centralized exchange is a better option for crypto storage than a wallet for most people but this brought criticism from some within the industry especially considering that Binance themselves suffered a hack in 2019.
However, Vitalic Buterin, who is the CEO of Ethereum, chimed in and stated that it is the responsibility of users to protect their private keys or not that of the systems designers.
“Disappointed at people replying to this with ‘crypto is what it is, it’s your job to be super-careful and write down backup seeds in three places.’ We can and should create better wallet tech to make security easier,” he said.
He also suggested the concept of social recovery which means that multiple users may combine the keys to recover the wallet key of another user but some pointed out its drawbacks such as the trust required and the creation of multiple targets for hackers.