Centralized cryptocurrency storage

Everyone who comes into the world of cryptocurrency first comes across centralized exchanges such as Binance, ByBit, FTX, CoinBase, KuCoin, Gate.io, and many others. All of these exchanges have one thing in common: they are private organizations with management and acting with one goal in mind: profit maximization. Let’s take apart their advantages and disadvantages.

When you register an account, the exchange opens a custodial wallet for you. This is a wallet, the user of which does not have full control over his funds because only the wallet operator (Custodian) has access to the private key. In reality, the exchange keeps all the funds in their wallets, and the user sees only the display of funds in their account.

Thanks to this storage system, the user can exchange tokens and coins from different blockchains/networks quickly. But the user also assumes all the risks of the exchange, such as hacking, blocking, sanctions, and so on.