Jun 25, 2021
When it comes to your money, the security is of paramount importance whether you are investing in a centralized banking system or you are investing in a cryptocurrency. In the wake of the past infamous hacking experiences of the cryptocurrency, it is always better to do your homework before choosing the right crypto exchange for you.
The global digital asset exchanges store a massive amount of money in their wallets which makes them extremely vulnerable from hackers. Some of the high-profile exchange hacks include the Mt. Gox hacking, in the year 2014. Mt. Gox had lost 850,000 BTC which was equivalent to $ 450 million at that time. The hacker group gets caught, and a lot of funds has been retrieved from them. Moreover, a special trustee will lookout for ways to refund the account holders.
Another well-known exchange that overcame a big hack is the Japanese CoinCheck. This asset exchange lost $ 500 million at the beginning of the year 2018. The CoinCheck is committed to compensating the users those who lost their funds in this hacking.
How to choose a safe and secure cryptocurrency exchange?
Here no one can guarantee you a 100 percent safety, but there are points to consider to minimize your risk of losing all your money.
Find out the number of people trading on the exchange. The volume is something you must consider before choosing the exchange for trading. If there are more people involved in the trading on a particular exchange, the risk is comparatively lower.
Unless you are planning to do the trading, do not just leave your funds on an exchange. As most of the time, the funds are in the hot wallets of the exchange which are quite vulnerable from the hackers. Ideally, the exchange should keep the funds inside the safe cold wallets.
There are few things you can do to keep your account safe – it is advisable to enable 2FA protection, use unique passwords for each account and also always be careful that your funds are deposit in the right wallet.
Never trade on an unknown exchange
Inexperienced and unknown exchanges often lose money due to their faults. BitGrail lost $195,000,000 in NANA tokens at the beginning of the year 2018.
Another exchange called Coinsmarkets took away users’ funds worth millions of dollars.
Consider the exchanges which are on Linkedin or listed on a well-known exchange’s website. Also, you can trust an exchange which maintains a public record of its team members.
Recently, Huobi Global which is a digital asset exchange suggested introducing a new set of industry standards that will be more effective to protect user’s fund. The company proposed that all the industry professionals must come forward to handle security issues and make the whole digital asset transactions a safer option.
Huobi Global suggested that there should be funds kept separately to reimburse its users in case the fund gets stolen. Also, to keep the funds in cold wallets to ensure safety.
Other things the cryptocurrency exchange company emphasized on are a mandatory 2FA verification and installing a cybersecurity team trained in bitcoin protocols.
In spite of all these scams and threats, no one can deny that there are serious players in the business and those are working towards making the system more secure for the traders.
So, if you are looking for an exchange for trading, carefully choose one as per your expectations and requirements and then only do the cryptocurrency trading.
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