As a reminder, cryptocurrency storage can be custodial or non-custodial. In the former, the private keys to the coin address are controlled by an intermediary like a cryptocurrency exchange or a centralized wallet operator. In the second case, the user does it himself, so he can consider himself the real owner of the coins.

Ledger Nano S Plus Genesis Edition

The key difference here is that the user has a so-called sid-phrase – a unique combination of 12, 18 or 24 words that allows them to dispose of their own coins at different addresses. As we discussed earlier with the Ledger Nano S Plus hardware wallet, this phrase is created when you set up the device at the beginning of your interaction with it.

There is a trend in the crypto industry right now to switch to hardware wallets. What is happening is due to the recent bankruptcy of cryptocurrency exchange FTX, which caused many users to lose their own money.

As Ledger’s CXO Iain Rogers noted in mid-November, the first Sunday after the FTX bankruptcy ended with record sales for the company. Which means many cryptocurrency enthusiasts are really starting to be responsible for storing coins themselves.

Where is the best place to store cryptocurrency?

During an online discussion on Twitter Space Zhao voiced the following quote.

This is true for most, for 99 per cent of people today. If you ask them to hold cryptocurrency on their own, they will end up losing it.

Perhaps Zhao was referring to humanity as a whole here. Because a similar figure can hardly be applied to cryptocurrency users who have previously interacted with coins. Still, keeping crypto safe isn't as difficult as it might seem - especially if you ignore the various fraudulent earning offers that involve sending your coins to someone else's address.

Binance CEO Changpen Zhao

According to Decrypt’s sources, Chanpen is supposedly “neutral” about exactly where crypto-enthusiasts store digital assets. That said, he doesn’t believe they are capable of following even basic security rules. Here’s a relevant quote from the entrepreneur.

Most people are unable to back up their private keys, they can also lose their hardware wallet. They don’t have proper encryption to back them up. If they write the passwords on a piece of paper, someone else will see the secret combinations and steal the funds.

Zhao's argument is valid - many investors forget their wallet passwords or lose the devices that hold the private keys to access their crypto. In the end, though, it comes down to being able to keep the sido safe. If it is kept safe, it will be very difficult for users to steal cryptocurrencies, provided they are using a hardware wallet.

The Binance executive also mentioned that if a cryptocurrency holder dies, it is difficult to access the assets and pass them on as an inheritance. He continues.

I always try to educate people so that they understand that there are risks. Keeping crypto in-house doesn’t take away from the risks. In fact, I think more people lose money by holding assets in their own wallets rather than on centralised exchanges.

Ledger Nano S cryptocurrency wallet

I wonder what the customers of the bankrupt FTX exchange think about this? After the collapse of the platform they are unlikely to see their money in the near future, and we could be talking about decades here. Still, until recently FTX was not a concern for most, and many people still have cryptocurrencies there.

Zhao’s advice is not very relevant in this context. It’s understandable though – it’s really hard for newbies to understand sid-phrases, private keys and other details of the cryptocurrency world – the benchmark for crypto storage should still be a hardware wallet, not an exchange account. As the cryptocurrency community says, “not your keys, not your crypto-assets”.

It should be noted that interacting with hardware wallets is simple enough. We looked at an example of working with such devices in the Solana Stacking (SOL) in Ledger Live app. You can read more about it here.

Keys in the door lock

Yes, with self-storage of crypto, the investor will have to be responsible for everything that happens. However, he will have full control over the storage process and transactions, in addition he will be independent of any companies.


We don't think advocating storing cryptocurrencies on exchanges is the best idea in the current climate. And while Changpen Zhao essentially doesn't want the loss of coins by newcomers, such a recommendation essentially puts a damper on the development of coin users. Still, interacting with crypto on an exchange does not require knowledge, as trading platforms do everything for you. However, when dealing with hardware wallets, you have to understand the concepts of sido phrase, private keys and other important terms.

That's why we traditionally recommend to keep only cryptocurrencies that are meant to be traded on an exchange. And the bulk of crypto assets should be in a more secure vault.


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