- 27th March 2018
- Posted by: Lendo
- Category: BitCoin, Cryptocurrency
Yet more news of hacks and thefts of crypto assets is bound to makes crypto owners feel nervous. So, how can you make sure that your crypto is protected from the cybercriminals?
When choosing an exchange, always look at its security aspect. Yes, perhaps it is attractive because the commission is lower, or it has a crypto coin that you want to trade. However, don’t let these be your deciding factors, take a look at the following as well, if not first.
At the very minimum, an exchange should have a Know Your Customer (KYC) procedure in place. This is for verifying the identity of its clients. The process should include client screening, identity verification and questions about why the customer wants to join the exchange. There should also be a process for verifying clients’ email address and phone number. This adds another layer of security and shows that the exchange is complying with AML and CFT (funding terrorism) regulations. All these protect clients from bad traders who use exchanges to pump and dump amongst other fraudulent activity.
Look for a real decentralised exchange
Although some exchanges claim to be decentralised, they actually aren’t and this makes them easy targets for hackers. With decentralised technology there is no central point of failure; all deposits, withdrawals, and order books are transparently stored on the blockchain. However, it is not always easy to find a truly decentralised exchange, because they are in their infancy. Also, they are more complex to use, which is off-putting if you’re not up on all the technology. Take a look on the exchange’s website and check if it talks about being supported by ‘multiple nodes’, which is one clue that it is more secure.
Use cold storage
A cold wallet is one that can be operated without an Internet connection. Offline storage is more secure and the major exchanges, like Coinbase, keep the majority of funds in a cold wallet, and only keep enough stored online for trading needs, which they can plan ahead for by watching daily volumes in trades.
In the future exchanges will be more secure as the technology develops, but in the meantime, if you own crypto assets, look for the exchange that offers the best levels of security possible.