Exchanges Beat Wallets Despite High-Profile Bankruptcies: Report

In Brief

• Research by imToken has found that users prefer centralized custody over self-custody.
• The report comes despite the recent collapse of crypto heavyweight FTX.
• Notably, 38% of users thought wallets were less secure than exchanges.

Research by imToken has found that users prefer centralized exchange custody over self-custodial wallet solutions wallets.

The report comes despite the recent collapse of crypto heavyweight FTX. According to the poll, 63% of respondents believe trading on exchanges is easier or less expensive than trading on wallets.

38% of Users Find Wallets Less Secure
Notably, 38% of users thought wallets were less secure than exchanges. They worry about being hacked (29%) or losing cryptocurrency by accident (18%). That said, more than 40% of the customers surveyed said they would spend up to $100 for a wallet to address problems with existing wallets.

However, more than 25% believe that most people will begin converting to self-custody at least five years from now. Likewise, a quarter of users surveyed think that even in ten years, most cryptocurrency users will continue to employ custodial solutions.

And the majority of poll respondents (51%) told imToken that they would choose a new wallet if it offered better security with multifactor authentication. Interestingly, smart wallets’ increased convenience appears to be less obvious. Only a small percentage of users interviewed deemed wallets to be more convenient than custodial alternatives. As 76% of respondents preferred centralized custody.

FTX Collapse Didn’t Deter Users From Exchanges
The report reflects surprising user preferences despite a difficult last quarter for centralized crypto platforms. Before FTX-driven shockwaves hit the markets in Nov., a sizable section of the cryptocurrency industry was affected when 3AC collapsed in July 2022. Many well-known companies, including Deribit, Blockchain.com, and Voyager Digital, were among its creditors.

However, according to a previous study by Chainalysis and Bitfinex, the number of thefts and the total amount taken from centralized exchanges has decreased by around 58%. It has gone down from $972 million in 2018 to $413 million in 2021. In reality, the investigation discovered that Hodlers keep a significant amount of this cryptocurrency on centralized exchanges.

Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.