Where the technological advancements are boon for humanity, is proving to be curse also. With the hike in cybercrimes that target crypto exchange platforms, cybersecurity is the need of the hour for bitcoin exchanges. Due to the presence of an element of anonymity, bitcoin and other cryptocurrencies are vulnerable to cybercrime. Hackers can steal the funds or can even exchange for fiat currency without being caught.
Nowadays, many reputed and credible exchange platforms are on their toes to enhance the security of their user’s funds.
If you plan to invest with any exchange platforms, you must consider the following tips for building a secured exchange, provided by the original bitcoin trader.
To provide enhanced security to its customers, most exchange platforms use the two-factor authentication process. In the Two-factor authentication process, users are required to sign up using their user’s name and a password, along with a confirmation code sent to them through text or call. In case of any hacking, even if a hacker can steal someone’s login credentials, he would not be able to access without a confirmation code sent to the user through text or call.
Many exchange platforms are using time locks to provide enhanced security at the time of withdrawal. Time lock is an innovative solution which requires bitcoin transaction to be completed within a particular time frame using two keys.
The idea behind using two keys is that one key is needed to commence the marketing, and the second key is needed to finish the transaction. If any of the keys is not confirmed, then the whole transaction will be reversed, as stated by the app.
Multi-signature provides an extra layer of security to the finds of the users. As it requires more than one private key to conduct a bitcoin transaction. Multi-signature is beneficial for the users as their wallets are secured against any sort of mishandling of funds.
If investors are sure that their funds are secured with the exchange platform, they will only invest their money.
Some investors want to hide their identity when it comes to trading and hence, they prefer to avoid KYC verification. However, bitcoin exchanges, where identity checks are done before the trade, are more secure for investors. If KYC verification is done for all trades, the risk of fraud will be reduced substantially as investors indulging in illegal trading can easily be identified. KYC is used to identify the exchange platform’s authentic customers and restrict other illegal investors from entering the system.
When investors are trading for large amounts of bitcoins, he or she needs an extra layer of security for his funds. Cold storage provides that extra added security, as bitcoins are stored in an offline cold wallet. As the fund is not available online, hackers can’t access the investor’s fund. When huge funds are traded in any exchange platform, authorities are more attentive towards those transactions as they may attract cybercriminals.
To maintain the exchange’s security and reputation, huge funds are stored in an offline cold wallet.
The most effective way to protect user’s funds is to get their funds insured. An insurance policy should be purchased to protect investors’ funds from any cyber hacking or any technical mishaps. An investor should not be bothered about the loss due to operational issues, cyber-attacks, or any kind of embezzlement by employees. Whatever trading platform investor may choose, he should be confident about the safety of his funds.
Bitcoin trading volumes and daily transactions have witnessed an exponential increase in recent times. With the hike in volume and frequency of trading transactions, security against cybercrimes is the need of the hour. Major trading platforms are reforming their security systems to provide a secure trading environment to their investors.
Above mentioned tips prove to be successful in enhancing the security of the exchange platform. Investors tend to invest more with the platform if they are assured that their funds are in safe hands. Any trust issue with the exchange platform will ruin the credibility and reputation of the platform, which in turn will influence its profitability.
*Photo by Pierre Borthiry