Currently, hardware wallets are on the rise. Indeed, after FTX went bankrupt, investors became more wary and many decided to hold their cryptos on their own. So they acquire suitable wallets to keep their assets offline. But, according to recent statements from CZ, it can be dangerous. Here are the risks of self-custodial cryptos according to the CEO of Binance exchange.
Risks of loss would be higher with self-custody of cryptos
This December 14, Binance invited the crypto community in an exchange with CEO CZ, in a Twitter space. During the discussion, the co-founder of the exchange talked about the various risks involved in self-custody of crypto holdings. According to him, by opting for this solution, the majority of users will end up losing their assets.
An article from Decrypt reported the comments made by CZ during the exchange. It appears that Changpeng Zhao said: “ 99% of people, if you ask them to hold crypto on their own, they will eventually lose it “. ” I always try to educate people to understand that there are risks “, clarified the CEO of Binance.
CZ explained that the majority of crypto users are unable to back up their security keys. He presented the different situations that can arise and which explain the risks associated with self-care. First, users may lose their hardware wallets.
Second, some may not find the encryption suitable for performing their backup securely. Changpeng Zhao also said that users will write down their security keys on a piece of paper. But, this method is dangerous, because “ someone else will see it, and they will steal the funds “.
In addition, Changpeng Zhao introduced the case the user of the hardware wallet dies. He indicated that there will then be no way to give the digital assets he owned to his relatives. That said, CZ explained that Binance has “ a standard operating procedure to handle cases where crypto holders die.
According to Changpeng Zhao, ” holding your own crypto in your wallet is not without risk “. The CEO of Binance argues that people lose more cryptos when they hold them themselves than when they keep them on a centralized exchange.
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