Centralized exchanges are already working hard to improve their security defenses. But the security of the exchange has been attacked by hackers all the time.
Don't think of exchanges as banks, they are not a match.
The "absolutely safe" centralized exchange should not have appeared yet.
I still don't get why people still treat exchanges as wallet.
The name "exchange" clearly tells us what it should be used for but still yet you will still see those that still leave their funds there even after they are done with their trade or whatever it is that they used they exchange for.
Now my question is how hard can it be for someone to withdraw from an exchange? Is that they're scared of non-custodial wallet or what? I just don't get it.
I like that explanation! Exchange already has the right name. So does a wallet. Haha.
Regarding your question: Well, I think it's the simple fact that (most) people still have no clue about money and are just used to store their few EUR/Dollars/whatevers in their bank account. They are not sued to taking responsibility for their funds at all.
Now, when it comes to crypto it's exactly the same. Plus many people are already scared off by the crypto addresses and things like transaction fee, passphrase etc.
So yeah, people coming into crypto just to get rich quick are probably the most likely to keep their funds on a
bank exchange.