How to Assure the Security of Your Crypto Exchange

What’s the first thing you will consider while choosing a crypto exchange? Most of the people go either after reputation or Fees. But there is more to crypto exchange than just these two factors. 

You need to check the KYC/ AML process, Leverage options, Volume, Prices, Insurance, Asset Selection, Fiat Exchange and most importantly, Security of the Exchange. Although the reputation and fees of the crypto exchange are important factors, you need to make security your first priority. 

We all aware of the scams and frauds related to crypto exchanges. Many people lost their funds due to inadequate security provided by exchanges.

So to help you secure your funds, we are going to discuss about security of crypto exchanges. We will also guide you on how to assure the security of your crypto exchange.

It is a platform where you can purchase and sell cryptocurrencies. You can trade using cryptocurrency as well as fiat currency. All you need to do is create an account with exchanges. You can trade on multiple exchanges as well. It works like a trading platform in a crypto market. Crypto exchanges are involved in trading more than 100 billion dollars in a month.

As the market is growing, the number of threats are increasing as well. So you need to be really careful while choosing a crypto exchange. Make sure it is safe and secure. If you want to protect your funds, you can choose a White Label Cryptocurrency exchange platform. As it is decentralized, there are lesser risks.

More than $1 billion were lost in the last few years due to poor security of crypto exchanges. Even after such recurring hacking scams, only 46% crypto exchange have high-level security. You need to pay extra attention to the security factor because of all these reasons.

• Decentralized network: As it is decentralized, the transactions cannot be reversed. The funds lost will be lost forever.
• Third-Party: Most centralized crypto exchanges are the third party. When you deposit funds with exchanges, the entire funds are in a third party’s control. It is risky.
• No insurance: Exchanges many not provide insurance cover for loss of funds. Even if they provide, there might be various conditions and clauses.

Now, that we have discussed about the security concerns related to crypto exchanges, let’s see how to assure their security. It is always advisable to choose a trusted and secure crypto exchange for trading. White Label Crypto Exchange Software Development provides a safe and secure platform for trading crypto. Here are few of the factors you must consider in order to assure the security of your crypto exchange.

In cold storage, the funds are stored offline. The private keys are stored away from the internet to avoid hackers for hacking the funds. Make sure your crypto exchange stores all of your funds or most of your funds secured in cold storage. Some exchanges store 100% funds while others store 95% of funds in cold storage. You must also make sure that the funds are available as and when you require it.

Similarly, hot wallet means storing the funds online. Make you’re your exchange protect these funds by using Hardware security modules and multi-signature technology. This provides extra security to protect the funds.

• Fiat Currency Security:

Apart from cryptocurrency security, you need to check the Fiat currency security as well. Make sure the exchange stores these funds with secured and regulated banks.

• Infrastructure Security:

You also need to check the safety of the Infrastructure on which the exchange functions. Most exchanges use AWS technology for Infrastructure security. It provides,

Transport Layer Security

Controlled Encryption

Automatic Encryption

Network Firewall

Web Application Firewall

Hacking attack prevention

• Application Security:

Most exchanges provide mobile applications or web applications for trading. You need to make sure that the application is completely secure. Here are some factors you need to check to ensure application security.

• Secure Coding: Make sure world-class software developers make the application. You need to know if the code is reviewed. The code and the smart contract need to be audited to ensure security.
• 2 Factor Authentication: You need to go through 2 Factor Authentication in order to use the exchange software. Most exchange provides this service to safeguard the interest of the traders. The two-factor authentication includes.

Password

Biometric Identification

Email Verification

Phone Verification

Authenticator

• Withdrawal Protection: Withdraws made are protected through various security measures. Make sure the exchange protects the withdrawal. Exchanges use email verification for whitelisting any external address. Also, make sure they use two-factor authentication for every transaction.
• Customer Support: Make sure the crypto exchange provides 24 X 7 customer support. If there is any issue, you can directly contact the exchange for support and help.
• Certifications:

Check if the crypto exchange has all the necessary certifications. Most trusted and secure exchanges have all the certifications to safeguard the interest of the traders.

• Assessment:

Also, check if they go through a detailed security assessment. Many exchanges carry out assessment to check if all the security parameters are working properly. Make sure they implement various types of testing to check the security.

• Penetration testing:

It is a type of testing where the exchange tries to hack their own system to check any flaws. Make sure they implement this technique. They check their systems by attacking it and conduction audits.

• Bug Bounty:

In this program, the exchange offers a bounty to those who can detect bugs in their system. Various hackers try to hack the system to find vulnerabilities. The exchanges then work to fix the vulnerability.

• Security Team:

Make sure the exchange have a team of security professionals who can manage security as well as risks. A good security team prevents any attack on the exchange’s security system by constantly monitoring it.

• Information Security:

Make sure all the information is protected. The exchange deals with sensitive information. If it is not protected, it can lead to severe losses. The information should be encrypted. Also, access should be controlled and monitored regularly.

• Platform Security:

The servers on which the exchange works should be secured. It should be under continuous surveillance. Complete Platform security protects the funds against any type of fraud.

• Insurance Fund:

Make sure the exchange provides insurance of funds in case of theft or fraud. There are many exchanges which provide insurance of funds to the traders. Check the clauses and terms and conditions of the insurance policy.

These are some of the factors you need to check in order to assure the security of the crypto exchange. Apart from these factors, you need to take some measures to protect your crypto wallets. 

• You need to secure your PC/ Laptop by using antivirus and firewalls.
• You need to choose strong passwords to access your account.
• Encrypt your data so that nobody can read it.
• Use core wallets to ensure maximum security.

So if you want to protect your funds, you need to choose a trusted and secure crypto exchange. There are many exchanges to choose from. You can choose a centralized trading platform or a white label platform. But no matter which platform you choose, make sure they have all the security mentioned above parameters to protect your funds from hackers.