The cryptocurrency industry continues to grow in terms of crypto volume and users, as does the demand for better accountability and security. Having a trustworthy overall cryptosystem will encourage new individuals to use cryptocurrency. In the long run, it will push for the mainstream adoption of crypto.
If you are one of those undecided ones thinking about whether to join the crypto space or not, perhaps, one of your biggest concerns is the security of your prospect trading platform. Great job, because being cautious is one of the best qualities of a trader. Anyone serious about trading on an exchange must consider various safety features. And that is what we will tackle in this article.
Table of Contents
Hackers will continue to lurk.
The reality is that the cryptocurrency system is not perfect, just like other currencies. There will always be gaps that those with nefarious intentions will exploit. In the case of cryptocurrency, hackers take advantage of its digital nature. They strive hard to access private cryptocurrency wallets or exchanges to steal their valuables. Hence it is critical to safeguard your crypto and follow proper digital security protocols.
In May 2019, one of the most prominent and probably the most secure crypto trading platforms, Binance, experienced a security breach. Attackers got roughly 7,000 Bitcoins and KYC data from up to 60,000 individuals due to the malware they got into their system. Thus, even the most secure and largest exchanges cannot avoid system flaws. Another example is Mt.Gox, whose security measures got breached twice. They lost 80,000 Bitcoins in 2011. The second theft, which occurred in 2014, was even more significant because the value of Bitcoin was higher at the time, and hackers stole 850,000 Bitcoins, which are worth over USD 29 billion now.
Security measures of crypto trading platforms that you should check
Two-factor authentication for users
Two-factor authentication means the platform does not rely solely on the entered password when one is logging in. It sends another code to the registered device, email, or phone number of the user so the platform can validate if the person trying to log in is the legit owner of the account. The notification is real-time, and the user has limited time to send the sent notification. Some platforms even use multi-factor authentication when logging in or withdrawing funds, which adds an extra degree of security to the password.
Security reviews about the platform
Before using the exchange platform, one must research and see what other people say concerning it. Traders can get ideas from first-hand users of the trading platform they are planning to use and from the perspective of crypto expert reviewers. For instance, articles like the Bitcoin Up review give you valuable information that will help you in choosing a broker and has the potential to save you money in the future. Remember that hackers have already caused damage to various bitcoin exchanges in the past. Thus, one cannot afford to make mistakes in choosing a platform. Picking a crypto exchange or broker with robust security features is challenging, especially if one does not have enough experience in crypto trading.
The storage of the trading platform
Security experts suggest that a trading platform must have combined cold and hot storage for the crypto assets of their clients. When all crypto assets are in hot wallets, a hack of the exchange system might put their money at risk. A hot wallet refers to storage that is always online, connected to the crypto network or blockchain. Hence, it is vulnerable to online attacks. On the other hand, cold wallets are safer because they are off the internet. That means hackers do not have a way to penetrate the storage remotely.
Withdrawal activity notification
This feature is like the last line of defense for your account since you can cancel in real time an attempt to withdraw your funds through a notification from the platform. It can alert the account holder at the moment when a hacker is attempting to move crypto assets to an address outside the control of the owner.
Assigned IP address
Some platforms link the user accounts to a specific IP address to monitor their activity. Due to this, the platform can detect if the account gets opened in a different geographic location, computer, or browser. The platform interprets it as suspicious behavior because the IP address registering is not the usual one. As a result, it will inform the user and verify if it was him accessing the account.
To Sum It Up
Crypto Trading Platforms have different security features that make them safe for users. Thus, deciding whether or not a crypto trading platform is protected is subject to one’s discretion. However, it is vital to understand that, as a user, you have control over studying the platform before you even start investing in it.