The co-founder and CEO of Binance crypto exchange, Changpeng Zhao, said that for most people keeping crypto assets on an exchange is quite safer compared to keeping the keys themselves.
Zhao commented on January 19 in a tweet after Peter Schiff, a famous gold proponent and crypto skeptic, said that he lost access to all his bitcoins. While invoking the phrase ‘SAFU’ – a slang for ‘safe among the crypto community members, Zhao stated:
“Many hardcore cryptos [organizations] advocate storing your keys. But the truth is, today most people are not able to secure a key even from themselves (losing it). A trusted centralized exchange is #SAFUer for most people. The numbers speak for themselves. Need to work on wallets.”
The Binance CEO said that he thinks a centralized exchange is a safer storage option for many investors. One user noted that the suggestion is terrible coming from Binance’s CEO since the platform has previously been compromised. In May 2019, Binance crypto exchange encountered a significant security breach causing the theft of 7,000 BTC, which is equivalent to at least $40.7 million at that time.
The Challenge Of Keeping Keys Safe
Vitalik Buterin, Ethereum’s co-founder, disagreed with the idea that is popular among crypto proponents. The idea proposes that users should be responsible for safekeeping their keys and the system’s designer does not have any responsibility to avert loss of funds due to key mismanagement. Buterin added:
“Disappointed at people replying to this with ‘crypto is what it is, it’s your job to be super-careful and write down backup seeds in three places.’ We can and should create a better wallet tech to make security easier.”
Buterin proposes an idea of ‘social recovery’ which is a strategy that would enable many people one trusts to use their keys in combination to support the recovery of funds. But, one commentator said that social recovery systems have significant disadvantages. These drawbacks arise since it makes multiple people targets of probable attacks.
Moreover, social recovery needs a major degree of trust for the individuals involved in the entire process.
Crypto Exchange Complex Link With Hacking
The current immutability of the ledgers that manage a majority of crypto assets is a significant attraction for many hackers. Hackers target them more than traditional bank accounts. A bank transfer is reversible, while a crypto transaction is mostly irreversible. Hence, the cybercriminal gets to keep their ill-gotten tokens.
Currently, as the nascent crypto exchange market keeps thriving, more criminals are increasing their efforts trying to steal crypto assets. In that context, reports emerged, stating that the crypto-stealing viruses developed by the Lazarus hacker group were updated recently. The North Korean government allegedly sponsors the Lazarus group is demonstrating ongoing and adapting efforts to steal cryptos.
Reacting to the increasing popularity of SIM swapping, the US lawmakers have appealed to the Federal Communications Commission to be strict on the telecoms service providers. The legislators want these providers to be held accountable for the consequences of successful attacks.
Peter Schiff Bitcoin Losses
Peter Schiff alleged on Twitter that he lost access to his BTC wallet and that his password is now invalid. He said that his BTC is now worthless and has no market value since it is inaccessible. He commented:
“I knew owning Bitcoin was a bad idea; I just never realized it was this bad!”
After Schiff announced his loss, the crypto community came to the rescue. For instance, Anthony Pompliano, co-founder and partner at Morgan Creek Digital, asked if Schiff forgot his password to which the gold proponent said that his wallet forgot his password.
Pompliano requested Schiff to email him directly:
“The software executes the commands that humans give it. It can’t ‘forget’ anything. Email me, and I’ll try to help you recover the lost Bitcoin.”
But, it seems like the Bitcoin may be lost forever since Schiff responded:
“Eric Voorhees set up the wallet for me, and even he thinks there is nothing I can do. But you’re welcome to try if you have any ideas.”
Schiff is a vocal crypto critic who previously claimed that Bitcoin was not rising towards the end of the year. He even said that the flagship token would plunge to $1,000 to ‘complete the pattern.’