4 Crypto Exchanges That Keep Your Bitcoin Safe
All crypto exchanges say their security is top notch, but don’t just take their word for it. Read on to find out what additional security measures to look for.
When buying cryptocurrency, it is important to do so safely. This is because it is still a new and relatively unregulated industry. While almost all bank or brokerage accounts have insurance and other protections in place to protect your money, the same is not true of digital currency exchanges.
Some top trading hacks have shown how easy it is to lose your money. An example is Mt. Gox. In 2014, around 850,000 Bitcoins were stolen, worth around $ 450 million at the time. Less than a third of them have since been recovered.
This is one of the main reasons why security is often a major concern when purchasing digital currencies. If you are planning to invest in cryptocurrency, it is a good idea to make sure that you are using an exchange that is doing everything possible to protect your investments.
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Most of the major cryptocurrency exchanges have good security programs. User-level protection such as two-factor authentication (2FA) is fairly standard. When you activate 2FA, you will need to provide additional information each time you log in, such as a code that you will receive via text.
But users should look for an exchange that will go the extra mile to keep their Bitcoin and other currencies safe. Here are three additional security measures to look for:
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- Insurance: When you put money in a bank account, it’s usually FDIC insured, protecting it against bank theft or bankruptcy. Crypto exchanges do not have FDIC insurance. But exchanges that take security seriously offer additional insurance for your crypto. This way, if it is stolen at the exchange, you can be compensated.
- Cold room: Exchanges must keep some currency in what is called “hot storage,” which means it is online and accessible. From a safety standpoint, you want an exchange that keeps the majority of the assets in a cold store. This means it is offline, often isolated, and difficult to access physically.
- Bug Bounty Program: The idea of bug bounties is to encourage independent security experts – also known as ethical hackers – to find vulnerabilities in the system. Exchanges offer rewards so people will point out security breaches rather than exploiting them to steal your crypto.
Here are four major cryptocurrency exchanges that go further:
For more security, use cryptocurrency wallets
Keep in mind that even if you are using an ultra-secure exchange, for extra protection you should look into crypto wallets.
If the private keys of your cryptocurrency are stolen, it will be almost impossible to get your money back. The safest way to protect your digital currency is to use a cold wallet. It’s a material that you buy and keep offline, so it’s almost impossible to hack it.
Since cold wallets are not connected to the internet, you will not be able to easily access your crypto. A hot wallet, on the other hand, is a web, mobile, or desktop wallet. This is a good option for currencies that you want to access more easily. It’s not as safe as a cold wallet, so you only want to store a small amount of it that you plan to use on a regular basis.
There are many risks associated with buying Bitcoin or any other digital currency. That’s why it’s a good idea to protect yourself and seek a trade-in with insurance, cold storage, and bug premium programs. If you do, you can be pretty sure that you are doing everything to protect your assets.