Source: Cointelegraph Original: "{title}"
Views from: Alvin Kan, Chief Operating Officer of Bitget Wallet
History repeats itself: another top centralized cryptocurrency exchange (CEX) has fallen victim to a hacker attack, potentially marking the largest theft in human history. We narrowly avoided the worst outcome—the collapse of the platform and a devastating blow to the industry. This incident serves as a reminder that even the most powerful market participants are not infallible.
The privilege of CEXs to control user funds comes with risks, reminding us that the age-old method of non-custodial storage remains the safest choice. With advancements in security features, modern wallets not only safeguard assets but also help users securely maximize the value of their crypto assets.
The golden rule never fades away
After Bybit suffered a $1.5 billion hacker attack, the market quickly regained calm. However, had the platform not maintained a 1:1 reserve of customer funds, this attack could have had catastrophic consequences for the entire industry. Reflecting on the liquidity crisis of FTX in 2022, the bank run destroyed the platform within days, and compensation for billions of dollars is only just beginning to be initiated.
Historical data shows that CEXs have always been prime targets for hackers. Between 2012 and 2023, centralized exchanges experienced 118 hacker attacks, resulting in losses of nearly $11 billion—11 times the amount stolen directly from blockchain networks and crypto wallets. These cases repeatedly confirm the vulnerability of crypto market giants, and the golden rule of "not your keys, not your Bitcoin" remains profoundly relevant.
Depositing funds into a centralized exchange essentially means relinquishing control over asset custody. CEXs hold all private keys, which means they have absolute control over user funds. Besides a smooth trading experience, this model comes with numerous hidden dangers.
Firstly, centralized platforms concentrate vast amounts of assets in a few wallets, making them a tempting target for hackers. Although CEXs employ "ultimate security solutions" like cold wallets and multi-signature transactions, the third-party infrastructure they rely on for signature aggregation has proven to have vulnerabilities. When traders allow CEXs to hold their private keys, they may one day lose everything due to completely uncontrollable factors.
In addition to hacker attacks, custodial storage carries many risks: centralized exchanges may freeze accounts for complex legal reasons, impose withdrawal limits, or even go bankrupt due to mismanagement. History shows that these crises often strike unexpectedly, and the only foolproof strategy is to keep control of assets in one's own hands.
Not limited to crypto storage
Non-custodial wallets retain the private keys in encrypted form on the user's device, granting you complete control over your funds that CEXs cannot provide.
Self-custody is not without risks. You can freely interact with any DeFi protocol and trade any (even unlisted) tokens. However, this freedom comes with equal responsibility: in recent years, DeFi platforms have become more frequent targets for attacks, as developers often pursue rapid growth at the expense of security.
Modern wallets protect user freedom through multiple layers of security: multi-layer encryption of private keys ensures that only you can access them; transaction authorizations and DApp permissions require password verification, creating a double layer of insurance for daily operations; some products even innovatively eliminate the burden of remembering seed phrases while maintaining decentralization—using multi-party computation wallet technology, private keys are stored across multiple devices, eliminating single points of failure and allowing asset access recovery even if some devices are lost.
Security protection has transcended the limitations of "pure storage": beyond private key encryption, smart wallets can identify risks in the crypto ecosystem, providing timely warnings about malicious projects, phishing attacks, and fraudulent contracts; permission management systems can trace and revoke excessive authorizations to DApps; rigorous platforms may conduct independent audits by multiple institutions, establish security compensation funds, and enhance user awareness through anti-fraud education. High-quality non-custodial wallets are not just safes; they are intelligent assistants for the secure use of crypto assets.
Centralized exchange wallets are like flames that attract moths, with large amounts of assets naturally inviting attacks. One solution is to distribute storage across multiple wallets to reduce systemic risk, but more fundamentally, it is essential to reduce reliance on centralized platforms and make good use of the intelligent security features of wallets to regain financial autonomy.
Views from: Alvin Kan, Chief Operating Officer of Bitget Wallet
Related: Developers, beware! — The UK's crypto regulations are coming in 2026
This article is for informational purposes only and does not constitute any legal or investment advice. The views expressed represent the author's personal stance and may not reflect the official views of Cointelegraph.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
