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?
If Binance got hacked today, the news will be every where and would be worse than that of FTX and other exchanges hack due to how people are using Binance.
Despite FTX, LUNA and other exchanges hack that lead to the long bear market, people are still keeping their coins in Binance which means people have good trust in Binance despite not being right to keep our coins in exchanges but people are still doing it , i don't think they will stop.
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
Sometimes most people think it is difficult to use offline wallet because they lack good knowledge about the wallet, and some beginners are exposed to exchanges like Binance as a start for easy access to Bitcoin or crypto trading.
Some lack knowledge about privacy and did not know about the risk involved in keeping coin in exchange that's why they prefer exchange for easy access.