If you’re a crypto investor storing most of your digital assets on an exchange, then you’re playing with fire, believes Finder’s panel of experts.

The Aussie comparisons site, which regularly delivers crypto-related, poll-based predictions, has released its latest Cryptocurrency Wallets Report, and the main point it makes (although not verbatim) is: get your crypto off exchanges and into self custody. Now.

It’s actually something any even slightly seasoned crypto investor will already likely know or subscribe to, especially in the wake of the horrendous FTX exchange implosion late last year.

“Not your keys, not your Bitcoin” is a mantra often cited by the Bitcoin-loving faithful, referring to the holding of “private keys” – a string of (what should remain secret) letters and numbers that allows you to access and manage your crypto. The mantra applies to all cryptos, not just Bitcoin, however.

Note, while we at Coinhead are definitely advocates for investors and traders taking self custody of crypto, that stance comes with acknowledgment that it still makes sense to hold some assets on reputable exchanges if you’re frequently trading in and out of cryptos and/or taking advantage of certain yield opportunities. It all depends on your overall strategy and appetite for risk.

 

Finder’s key takeaways

For its latest poll on this subject, Finder consulted 56 fintech and cryptocurrency specialists, including FxPro senior market analyst Alexander Kuptsikevich, UC Berkeley faculty member Shuo Chen, and Finance Magnates senior analyst and editor Damian Chmiel.

The panel’s key consensus takeaways from the poll were as follows:

  • The majority (64%) of the panel says crypto isn’t safe unless stored in a personal wallet.
  • 62% of Finder’s panel thinks crypto holders should transfer their crypto off exchanges.
  • 67% of panellists believe it’s best to store crypto on cold-storage hardware wallets.

Cold storage, if you didn’t know, can refer to hardware crypto wallets such as the popular Ledger and Trezor brands, which store your cryptos’ private keys offline.

Seeing as they’re not “hot wallets” connected to the internet or on a centralised exchange, for example, it makes them far less susceptible to hacks.

You’ve still got to be careful when you do transact with them on websites and apps, however, and make sure you triple check your transactions are correct and going to the right place.

 

Regulations and better wallet solutions are needed, though

According to Bit5ive CEO Robert Collazo when using custodial wallets “you’re putting your funds’ trust in the hands of someone who may or may not be capable to manage them.”

Seasonal Tokens creator and founder Ruadhan O agreed with that, describing non-custodial wallets as “one of the best and easiest solutions to the current crisis in the credibility of centralised custodial platforms.”

And by “non-custodial”, he means the wallets crypto investors hold themselves.

Ruadhan O did, however, caveat that non-custodial wallets also have risks attached and may still be vulnerable to hacks.

CEO and founder of Omnia Markets, Mitesh Shah, believes storing crypto in hardware wallets is the best method because a “general rule of thumb is that any coins kept on exchanges are not truly yours. In a decentralised world, self-custody is always the safest and best option for storing your crypto.”

Standard DAO CEO Aaron Rafferty meanwhile agreed with these assessments, but explained that better wallet solutions will be required if crypto adoption is to increase in the coming years.

“A hybrid solution for centralised exchanges will be imperative so holders will not be subject to the same downfall as the recent results of the Celsius bankruptcy where it was ruled in Celsius’ favour for ownership over the assets held by the exchange,” said Rafferty.

“Regulations and better wallet solutions will need to be present in order to spur a true adoption-based bull-run in 2024-2026,” he added.

You can read the full Finder report here.

 

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