The number of crypto wallet adoption has been growing faster than ever before. In Q2 2020, we had more than 50 million crypto wallet users from all over the world. This is a new record that was not thinkable before.
With more people using crypto wallets, there are also increasing demands for convenience. Many of them don’t want to use a hardware wallet as they believe it’s too inconvenient. But of course, these people still care about the security of their crypto funds.
If you are one of these people, you might be wondering where would be the best place to hold your crypto assets. Well, the good thing is that there are exchanges out there who have extremely high security standards. If you want to be able to make your trades instantly and still have that extra peace of mind about your funds’ security, you might want to consider the option to leave your crypto inside these exchanges.
In this case, what you need is to just log in to your account, make the trades, and logout. No need to withdraw your crypto from the exchange account. Very practical and no headache when it comes to gas fees, blockchain transaction speed, and so on.
But here’s the important question. What happens if the exchange gets hacked? After all, it’s common to hear stories of crypto exchange hacks. In 2019 alone, more than $292 million worth of cryptocurrency were stolen.
Well, that’s why we are here. We need to know how to choose the right crypto exchange that prioritizes users’ security.
Cold Wallets Adoption
One of the most important parameters when it comes to security is the cold wallet adoption. Many crypto exchanges put too much of the user funds in hot wallets, and this is where things can go wrong with just one hacking incident. Crypto exchanges that store the user funds in cold wallets are much more recommended because the hackers wouldn’t be able to steal the funds remotely.
One good example is WhiteBIT, a European-based crypto exchange. WhiteBIT stores more than 95% of all crypto assets on cold storage. By practicing this, it guarantees absolute security of the user funds in case of a hacker attack. WhiteBIT users would feel much more confident to trade, knowing that their funds are protected.
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And unlike other crypto exchanges that also utilize cold storage, WhiteBIT is still able to process most withdrawals within minutes, 24/7. WhiteBIT is different as they have fully dedicated staff to process your withdrawal.
Another good example of this adoption is Japan-based Liquid.com, where they also store most of the user funds in cold hardware wallets. Liquid.com is known for its crypto-to-fiat exchange with decent selections of altcoins. They never had any hacking incident due to their very high security standard.
The Anti Phishing Protocol
Another very important thing about security is the utilization of anti-phishing protocol. While cold wallet usage is enough to guarantee user funds in case of a hacker attack, the user himself might not be fully safe in case of a phishing attack.
There have been many cases where users and even team members of crypto exchanges got phished by internet criminals, and they entered their login information on fake websites. From 2017 to 2018, thieves ran off with $882 million from various exchange websites.
Good crypto exchanges enforce anti-phishing protocols to make sure that the users wouldn’t fall prey to phishing incidents. Usually, they provide you with an anti-phishing code that you need to enter every time you attempt to log in or do some activities with your account. The fake websites wouldn’t know these anti-phishing codes. WhiteBIT and MXC have good anti phishing protocols that have tremendously helped their users to avoid phishing incidents.
For example, after you create your anti-phishing code within your WhiteBIT account, you will be able to easily tell fake WhiteBIT websites or emails. Sometimes, internet criminals attempt to scam users by sending spoofed emails. However, legit emails would contain your personalized anti-phishing code. So, by activating your anti-phishing code, you will be able to easily tell which email genuinely comes from WhiteBIT and which email is fake.
2-Factor Authentication (2FA)
Another very important security protocol that an exchange must have is the enforcement of 2-factor authentication (2FA). A good exchange usually tells you to download a 2FA app like Google Authenticator and link it to your crypto exchange account. By having this feature, no hacker will be able to withdraw any funds from your account as long as they don’t have access to your 2FA.
A secure platform always has multiple layers of 2FA, such as Nominex. One for the authenticator app and another one is for email. It will tell you to check your email for verification code every time you attempt to withdraw. On top of this, it will also force you to input the code from your 2FA app.
If you want to have the perfect combination of security and convenience, you should consider placing your crypto funds in your exchange account. However, not all crypto exchanges have the perfect recipe for security.
You should only consider crypto exchanges that put their user funds in cold wallets, enforce anti-phishing protocol, and enforce 2FA from both the authenticator app and email address. If you put your trust in a crypto exchange that has good security practices from these three factors, the chance for you to lose your funds will be extremely slim.