According to Changpeng ‘CZ’ Zhao, the former CEO of crypto exchange giant Binance, crypto wallets should be the default interface for using blockchains on an everyday basis.
In contrast, exchanges should mostly focus on the needs of professional traders and liquidity providers. CZ’s view was expressed recently in a conversation on X (formerly Twitter) with Trust Wallet’s Eowyn Chen.
CZ urges crypto users to utilize wallets instead of exchanges
During the conversation, CZ pointed out that many people confuse exchanges as wallets for crypto. He contended that traders should primarily use platforms like Binance and Coinbase to trade and dedicated crypto wallets such as Trust Wallet to store profits and interact with the wider blockchain space.
According to CZ’s perspective, on the matter of exchanges’ longevity in the market space, they may not be sustainable in the future except for traders seeking a substantial pool of liquidity for their transactions, furthermore implying that the average individual may not find it necessary to engage with them frequently.
His comments underscore a broader shift in the crypto industry, where wallets are no longer just a place to store crypto. Wealth management, remittance, DeFi services, and digital identity solutions pop up as doors in modern wallets.
Trust Wallet CEO Eowyn Chen agreed with CEO CZ, stating that wallet adoption is growing. She said they have almost 200 million downloads, about 77% of the finance registration users. Chen noted that they feel like a decentralization wallet, and with all the challenges that they have been through, achieving this level of user trust is a significant honor.
The shift also shows that a growing number of users are abandoning speculative trading in favor of wallets for day-to-day financial dealings. Removing the wallet function from the exchange function is also beneficial for the ecosystem as it caters to different users.
CZ sees crypto wallets as the future of digital identity and services
CZ also pointed out the possibility of crypto wallets being used as digital identity tools. Governments exploring blockchain-based identity solutions may lay the groundwork for wallets to become essential infrastructure for DRM of digital credentials.
CZ said that when governments look at blockchain, they’ll first need a digital and decentralized ID solution, which necessitates a wallet. He believes people should be able to do everything from their wallets, saying they are a little bit like the browser to the internet.
This vision suggests that wallets may move beyond just finance and support areas like education, digital credentials, and public services. Chen elaborated on this idea further, visualizing a future where our wallets support digital certificates and identity systems.
The crypto industry is maturing, and the distinction between exchanges and wallets is becoming clearer. Exchanges will probably remain as a tool for professional traders and liquidity providers. At the same time, wallets will break out as much more than a wallet — evolving into the tools you use to manage your finances and identity.
Although CZ is no longer Binance CEO, he continues to be involved in blockchain. He serves at YZI Labs (previously called Binance Labs) and the Giggle Academy.
The discussion around wallets versus exchanges is by no means settled. Still, CZ’s most recent comments highlight an important movement.
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