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As more and more users step into the emerging world of crypto and blockchain, the options for storing your crypto assets grow daily. But for new users, this choice can be overwhelming and confusing. If youโre looking for the safest place to buy, trade, or store crypto, one of the most popular recommendations will be Binance. This article will explore if Binance is a safe place to store your crypto.
What is Binance?
Binance is a centralized crypto exchange, known as a CEX for short in the crypto world. Binance was founded in 2017 by Changpeng Zhao, a Chinese businessman and crypto advocate who set up the exchange after amassing his fortune through Bitcoin investments.
If youโre wondering how big Binance is, exchanges donโt get bigger. Binance recently surpassed 200 million users which comfortably makes it the worldโs biggest crypto exchange. However, itโs important to note that not even the worldโs biggest exchange is immune from strict crypto laws. As a result, Binance is banned in several countries around the world including the US. Binance US, which was set up to comply with US regulations, is also unavailable in the following states and states/regions:
- Alaska
- American Samoa
- Hawaii
- Maine
- New York
- Oregon
- Texas
- Vermont
- Guam
- Northern Mariana Islands
- U.S. Virgin Islands
How does Binance store your crypto?
If using Binance to trade crypto, users have the option to store their funds on Binance or withdraw them to a personal wallet.
If storing your crypto on Binance, your assets will most likely be stored in cold wallets (physical devices with no connection to the internet). This is the most secure way an exchange can store a userโs funds and is also employed by exchanges such as Kraken and Coinbase who have an impressive track record of security.
Whilst this makes Binance a safe place to store your crypto, more advanced crypto users often choose to withdraw their funds to a crypto wallet.
Is your crypto safe on Binance?
In short, Binance is considered a very safe option to store your crypto and Binance fraud is few and far between. However, it is important to consider that nowhere is 100% safe in the Wild West that is web3. Even the worldโs biggest crypto exchange is susceptible to breaches as was evidenced in 2022 when over half a billion dollars was stolen in a hack.
The main ways that Binance protects against attacks include:
The Secure Asset Fund for Users
In July 2018, Binance set up The Secure Asset Fund for Users (SAFU). This was an emergency reserve fund that could be used to restore stolen funds of Binance users as a result of a previous hack. 10% of usersโ trading fees go into the fund which is believed to be maintained at around $1billion.
Interestingly, in April 2024, Binance converted their entire SAFU into USDC, a type of crypto asset pegged to the US dollar which helps to keep its value consistent and protected from the volatile price changes that are common amongst cryptocurrencies.
Two-factor authentication
Binance requires users to set up two-factor authentication. This means users need to provide two forms of verification which adds an extra layer of protection as hackers or bad actors would also need to access a userโs phone number in addition to their password.
Although two-factor authentication is a common feature of crypto exchanges, Binance allows users to set up two-factor authentication (2FA) with a YubiKey – a hardware device that facilitates one-time authentication and access.
Cold storage
As mentioned previously, the vast majority of funds that Binance is responsible for are stored in cold wallets. Cold wallets or cold storage refers to the storage of data or assets offline. This means Binance will store your crypto in a hardware device without an internet connection.
The most common ways that attackers will try to steal funds is by using online scams such as phishing attacks, bridge attacks and wallet hacks. Utilising cold storage therefore protects users from the most common threats.
Conclusion
On the whole, Binance should be considered safe. Due to factors such as The SAFU, users are well protected from hacks and stolen funds. This makes Binance a great choice for storing crypto if youโre new to using blockchain technology. However, for those looking for maximum security when it comes to storing their crypto assets, users should consider withdrawing funds from exchanges and storing them in a non-custodial wallet such as MetaMask or Trust Wallet. Be aware that this requires the user to have full responsibility for storing their private keys and, as a result, the safest option for users may be to use an exchange until educated about the self-custody of crypto assets. Whatever method you choose, be sure to educate yourself about tips for keeping your crypto funds safe.
