Connect with us

Cryptocurrency

Only 1% of people can handle holding cryptocurrency right now: Binance CEO

Avatar

Published

on

Binance CEO Changpeng “CZ” Zhao has warned the cryptocurrency community to be on guard, stating that 99% of people who choose to hold their cryptocurrency are likely to lose it in one way or another.

CZ has been a proponent of self-booking for years, referring to it as a “fundamental human right” but always urging users to “do it right”. CZ Tips on Cryptocurrency Self Storage posted in February 2020.

During Recently On December 14, the Binance CEO continued to urge users of Binance-run Twitter Spaces to be careful of those who use self-custodial wallets — pointing out that oftentimes, security keys are not securely stored, backed up, or properly encrypted. And he commented:

“For most people, for the 99% of people today, who are asked to hold cryptocurrency themselves, they will end up losing it.”

CZ reiterated that holding cryptocurrencies in its wallet is “not risk-free” and posits that “more people lose money in possession of their money — they lose more cryptocurrencies when they hold them alone than they do on a centralized exchange.”

Advertisement

Most people are not able to backup their security keys; they will lose the device […] They won’t have the proper encryption for their backup; They’ll write it on a piece of paper, someone else will see it, and they’ll steal that money.

The Binance CEO also mentioned that even if self-custodial funds are managed properly, “if someone dies, they have no way of offering them to their next of kin,” but custodians like Binance can implement a “standard operating procedure to solve this problem,” he said.

The Binance CEO concluded that “different solutions have different risk profiles” and that it is up to the user to decide what is best for them.

Advertisement

While most of Binance’s operations are “centralized,” CZ reiterated that the company has remained “neutral” about its preference for custodial and self-custodial solutions, with the CEO stating in a previous Twitter Space discussion on November 14 that He was pleased with the closure of the central cryptocurrency exchange If users move to decentralized alternatives.

“If we can have a way to allow people to keep their own assets in their own custody safely and easily that 99% of the general population can do, then centralized exchanges wouldn’t exist or might not need to exist,” he said of CZ.

Related: Members of the cryptocurrency community discuss running banks on Binance

Binance’s latest Twitter space comes amid a turbulent time for the exchange, which has seen massive withdrawals due to concerns about its balance sheet and potential upcoming litigation.

A December 11 report from the Wall Street Journal suggested Several red flags in Binance’s Proof of Reserves auditwhile Reuters published on December 13 Report Suggested that the US Department of Justice It is nearing the end of a three-year investigation on Binance, which may come with criminal charges.

Advertisement

The past few days have seen a significant amount of stablecoin outflows withdrawn from the exchange, including $2.2 billion in outflows from stablecoin Binance USD (BUSD) and Tether. (USDT) and US dollar currency (American dollar) over a 24-hour period between December 13th and 14th, according to data from blockchain intelligence platform Glassnode.

BUSD, USDT, and USDC outflows on Binance during the 24-hour period from Dec 13-14. Source: Glassnode.

Interestingly, Bitfinex’ed – a longtime critic of Tether – shared a screenshot to its 98,000 Twitter followers on Dec. 14 of Binance’s latest offering of 50% APR on pegged USDT to its customers, alleging that the exchange may be looking to boost its waning claims. Fast for stablecoin reserves.

In the latest Twitter Space discussion, CZ attributed the weak market sentiment — particularly on precautionary solutions — to A catastrophic fall for FTX.