Cold Wallets Remain Unpopular Among Crypto Holders Despite Safety Benefits

Key Points:

• Hot wallets are the most popular method of cryptocurrency storage, with 8 out of 10 people using them.
• Despite the recent increase in cryptocurrency hacks, many crypto holders still prefer hot wallets or centralized exchanges.
• Low usage of cold wallets indicates that crypto adoption is still in its early stages.

Despite the recent rise in cryptocurrency hacks, many crypto holders still prefer to use hot wallets or centralized exchanges for storage. The low usage of cold wallets also indicates that crypto adoption is still at an early stage.

Crypto storage is a much-debated topic in the industry, with varying opinions on the best methods to keep funds secure. According to a recent study by CoinGecko, hot wallets are the most widely used method of cryptocurrency storage, with 8 out of 10 people using them for self-custody.

The rise in popularity of NFTs among crypto holders could be one of the reasons for the widespread usage of hot wallets. However, 7 out of 10 people still store their cryptocurrency on centralized exchanges, aligning with centralized exchanges’ current dominance.

The study also revealed that most crypto holders prioritize convenience over security, relying on centralized exchanges for on- and off-ramping as well as buying and selling cryptocurrency. Only 3 out of 10 do not use centralized exchanges for crypto storage, representing those wary of leaving their funds in third-party custody or no longer using centralized exchanges.

While cold wallets are one of the safest ways for cryptocurrency storage, only 3 out of 10 people use them, pointing to poor crypto cybersecurity practices.

Despite the recent rise in cryptocurrency hacks, with a ten-year high of $2.8 billion in 2022, many crypto holders still prefer to use hot wallets or centralized exchanges for storage.

The low usage of cold wallets also indicates that crypto adoption is still at an early stage, with most participants engaging in easier-to-understand activities with lower barriers to entry or significant incentives. As cybersecurity awareness increases and crypto holders become more on-chain native, cold storage wallets will hopefully become a common practice.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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