Binance CEO Says Exchanges Are a Safer Place to Hold Crypto Than a Wallet, Which Is Incorrect

January 20, 2020 / by Crypto.IQ

Peter Schiff created a flurry of controversy on Twitter when he lost access to his Bitcoin (BTC) wallet, apparently due to the wallet becoming corrupted, and his password supposedly no longer being valid, which does not make that much sense.

In any case, Binance CEO Changpeng Zhao responded that most people do not have the ability to store a crypto key themselves, and therefore they should just store crypto on centralized exchanges like Binance.

This is untrue, since if the government takes down a centralized exchange, or if the exchange is hacked, then a user’s crypto could be lost. Indeed, Binance was hacked in May for over $40 million of cryptocurrency and shutdown for a week. Most exchanges which get hacked never recover, so Binance was actually the best case scenario for an exchange hacking.

Either way, whether crypto is inaccessible for a week or lost forever, it certainly is not better than individuals storing crypto in their own wallets. If an individual can safely store their crypto, they can access it at any time and there is no chance that they will lose it.

The best way to store large amounts of Bitcoin (BTC) is with Bitcoin Core, since it does not depend on any centralized servers. The important thing is to make a copy of the private key, either very carefully on paper or with a non-digital polaroid camera, and to then keep that key copy in a place where no one could ever find it. If a crypto user can follow these simple steps they can then hold as much Bitcoin (BTC) as they want without ever losing it.

For smaller amounts of Bitcoin (BTC), the Blockchain.com wallet is sufficient, and users should save the seed in a very safe location.

Thus, it is straightforward to store cryptocurrency securely in a wallet. It is not better to store cryptocurrency on a centralized exchange like Binance long term, since it could be lost, whereas when storing crypto in a wallet only the owner will have control of it.