I am in the process of purchasing a Ledger Nano offline wallet and it got me thinking about why people store their digital assets on crypto exchanges.
These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
First of all, the exchanges use cold wallets to keep the majority of their funds, so it's simply not possible that Binance (or other exchanges) can los the majority of their assets because of a hack, they're not that stupid. But to answer you question there are several reasons: people who don't even know what is a Ledger, people who do daily trading so they need the funds to be available all the time, simply lazy people and so on.