These exchanges are susceptible to hacking, insolvency/bankruptcy, misuse of customer funds (FTX) etc.
What would happen if Binance got hacked tomorrow and lost the majority of its cryptocurrency? Would they be able to reimburse customers or would they become insolvent?
I asked my close group of friends how many store their assets on exchanges and only 1 out of 6 uses an offline wallet.
The recent incident with Luke Dashjr confirms that you are always at risk of being hacked no matter how vigilant you are.
Will give my thoughts on the Ledger Nano once I receive it.
If Binance will get hack and all of the funds successfully stolen by hackers with no chance of getting it back, well we can say that this will be the end of their business and another series of crying depositor which they cannot get back their money. Its just the same with FTX since for sure they cannot pay all of their depositor since that's a lot of money need to take care on.
Why people store their cryptocurrency in exchange? Some of them are to lazy to take out their money because they always think its better to do that since they will still go trade tomorrow or on next several months. And there are other who doesn't want to get deducted by fees.