Binance is currently one of the most used and well known exchanges to buy and sell coins and tokens, and we don’t see that changing any soon.
The question though is, is it actually safe for you to leave or hold your coins and tokens on Binance?
- Binance’s cold storage – Binance holds the majority of their funds on their cold storage, hence the majority of their funds are significantly harder to steal compared to the minority of their funds stored on their hot wallet.
- Binance’s “SAFU” fund – Binance stores 10% of the trading fees they received on their emergency insurance fund, supposedly for them to hopefully be able to compensate their users if ever funds get stolen.
Is Binance Wallet Safe?
Yes and no. Binance is definitely one of those exchanges that are taking their security seriously, and because of that, Binance is a great platform to use for trading cryptocurrencies. With that said, no matter how secure the exchange is, they’re always a hot target for hackers. Hence, storing funds for long-term storage on Binance and any other exchange is a big no.
As always it’s far safer for you to store your funds on a non-custodial wallet; and preferably, a reputable hardware wallet like the Ledger Nano X. That way, even if every single exchange in existence gets hacked, your funds will remain untouched.
Why? Your accounts might not be as secure as you think.
While the exchange itself might be secure, your account might not be. On the 8th of May 2019, hackers have stolen $40 million worth of Bitcoin from the Binance exchange through a “variety of techniques, including phishing, viruses and other attacks”, as said by ChangPeng “CZ” Zhao, Binance’s CEO, on their article publicized on the 7th of May 2019. That should be enough for you to hopefully stop unnecessarily leaving funds on Binance or exchanges in general.
“Not your keys, not your bitcoin”
While this quote is directly referring to bitcoin, it should apply to pretty much every single cryptocurrency. Only use wallets whereas you have control over the private keys/recovery seed, as that way, even if the exchanges you use gets hacked, your coins don’t get lost along with it.
Another reason is that one of the main selling points of bitcoin is that it’s unconfiscatable. When you leave your funds on centralized exchanges, it defeats that purpose. Exchanges in general can lock up your account(s) regardless if you did something wrong or not. A lot of people think that this easily fixed by simply submitting a support ticket to the exchange, but in some cases, it’s not. This occurrence has happened a lot more than most people think.
Exchanges are exchanges
Use exchanges for their sole purpose, as a platform to exchange your money for some bitcoin and other cryptocurrencies. Don’t get us wrong, Binance is providing a great service. But it doesn’t mean you should unnecessarily leave your funds there.
Simply withdraw your funds after every transaction using exchanges like Binance, the same reason why you wouldn’t leave your hard-earned money on money remittance centers and money exchangers. Instead, you simply withdraw the cash and lock them up in your personal safety, or you store them in your bank. The same thing should be done with your coins and tokens. Simply send them over to your personal wallet whereas you have control over the private keys.
Yes, you need to leave funds on exchanges to be able to trade. But, it’s heavily suggested that you only leave funds on Binance that are actually being traded. If there’s a number of coins that are just sitting on your Binance account without it being traded, withdraw them as soon as possible.
P.S. If you don’t have a Binance account yet, you can use our referral link here to help us out and to receive discounts in trading fees!
Where do I keep my funds instead?
We heavily suggest the usage of hardware wallets especially if you own coins and tokens that are worth significant amounts of money.
Hardware wallets are small devices made specifically for securely holding your coins and tokens, and are small enough to fit in your pocket. We heavily suggest using a hardware wallet instead, if you’re holding a significant amount of cryptocurrencies. A hardware wallet is definitely your best choice for holding coins and tokens without fearing getting hacked.
- High security – your wallet’s private keys never leave the device. Hence, you could really do transactions even if the computer device you’re using is infected with malware and viruses, as long as you make sure that the coins are being sent to the right address.
- Less convenient – You need to plug in your hardware wallet to your computer to make a transaction; though fortunately the new Ledger Nano X has Bluetooth functionality, giving you the option to send transactions using your mobile phone instead.
Some great hardware wallets
Reminder: Keep your recovery words backed up offline
It might be very convenient to store your wallet’s 12-24 word backups on an email, a .txt file, or on your phone’s notes app, but be wary that storing your wallet’s 12-24 word backups digitally is a huge risk. If a hacker gains access to that file or email, you’re pretty much screwed.
Only store your wallet’s 12-24 word backups offline on a piece of paper, or better, a CryptoSteel Capsule which should protect your backups from fires and water damages.
If there’s one thing that we want you to remember from this article, is the quote “not your keys, not your bitcoin“. The only way to have total control and to have significantly better security over your funds is to use a wallet that gives you access to your private keys/recovery seed. That way, even if for instance every single existing bitcoin/cryptocurrency exchange gets hacked, your coins will be untouched.
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