Changpeng Zhao: The Biggest Challenge of Self-Custody is Storing Mnemonics

Changpeng Zhao, co-founder of Binance, pointed out that the biggest challenge in self-custody of virtual assets is the storage of seed phrases. He made this remark on X (formerly Twitter) at 12:57 AM on the 3rd, sharing the experience of a user named 'Rager' who encountered a hardware wallet failure. Zhao outlined four conditions for storing seed phrases: 1) No exposure to others, 2) No accidental damage, 3) No hacker access, and 4) No personal loss. He warned that if any of these four conditions are violated, the assets cannot be recovered. Self-custody allows users to control their virtual assets directly with personal keys and seed phrases, without entrusting asset management to an exchange. A seed phrase consists of 12 to 24 English words and plays a crucial role in wallet recovery. If this phrase is exposed to the outside, assets can be stolen, and if the holder loses the phrase, they cannot access the wallet. Zhao reportedly faced difficulties in recovering assets using the seed phrase when his hardware wallet failed. He co-founded Binance in 2017, which has grown into the world's largest virtual asset exchange, and his comments are interpreted as emphasizing the risks of self-custody.

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