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Crypto Exchanges that Guarantee Investor’s Digital Currency Safety
Traditional financial institutions have set up insurance and other protections in place to keep your money safe. For digital currency exchanges, it’s the opposite. Before you indulge in any crypto activity like buying or selling, you have to make sure you do it safely because it’s a relatively unregulated industry.
Security is vital for any cryptocurrency user globally; no one wants to be a victim of theft. The Federal Trade Commission estimated that nearly 7,000 people lost more than $80 million between October 2020 and March 2021. It was a phenomenal 1,000% increase from a year ago. A recent theft attack of more than $10 million stolen in various cryptocurrencies shows how security is vital in the industry. You might be wondering which exchange is the most secure for your funds. Well, worry not. Here, you will have a detailed list of the preferred secure exchanges you can choose.
What are Crypto Exchanges?
A cryptocurrency exchange is a platform where crypto users can buy and sell cryptocurrencies. In addition, you can decide to use an exchange to convert one cryptocurrency for another, like converting Bitcoin to Ethereum.
You may also decide to purchase cryptocurrencies using regular currencies like the U.S dollar to Dogecoin. Alternatively, you can convert, for example, your Dogecoins back into U.S dollars or any other currency of your choice. Finally, you can decide to leave your fiat currencies as cash in the exchange if you plan on trading it back into cryptocurrencies later or withdraw it to a bank account of your choice.
Interestingly, an exchange displays the current market prices of all cryptocurrencies it offers. It makes it easy to decide which crypto is best to trade and which ones to avoid. Since there are several exchanges in the crypto realm, you need to choose the most secure, if not the best, for trading your cryptocurrencies. That’s because exchanges are not like traditional banks that keep your money safe all the time. They are entirely decentralized. To pick the most secure exchange, you need to know what ensures that an exchange is secure.
What Makes an Exchange Secure?
Unlike traditional investments or banks, cryptocurrencies deal with no intermediary, which means that you need a secure exchange to keep your crypto investments safe. For this reason, most exchanges have a suitable security program like the two-factor authentication (2FA) requirement.
In particular, this user-level protection requires you to provide additional information like a code you receive by SMS any time you want to log on. Nevertheless, it would help if you looked for an exchange that goes the extra mile to secure your cryptos. Some additional security measures include:
Firstly, you need an exchange that provides insurance, more like banks that provide FDIC insurance that protects your money against theft or bank failure. However, exchanges like Gemini and Coinbase insure any balances you keep with them in U.S dollars in FDIC-insured bank accounts. What’s more, Coinbase has an insurance policy worth $255 million. So it would protect its users’ accounts if Coinbase’s reserves to that amount got hacked or stolen.
Secondly, exchanges keep some of their currencies online, “hot storage,” which means that funds are easily accessible and prone to hacks and theft. That’s why you should consider looking for exchanges that store the majority of assets in cold storage. Its because it becomes hard to access the assets in cold storage physically. Even though exchanges need to keep some liquid crypto active to facilitate trades, cold storage makes it more difficult for hackers to access. In particular, Coinbase boasts of storing 98% of customer funds offline, with only 2% used for active trading.
Lastly, an exchange that promotes bug bounty programs is a good pick for better security. To be precise, a bug bounty encourages independent security experts – ethical hackers – to detect system vulnerabilities. Several exchanges utilize bug bounties to offer rewards so that users can report security weaknesses rather than take advantage of them and steal your cryptocurrencies.
The Most Secure Exchanges
It would be best if you kept your cryptos safe from theft. The list below shows the most secure exchanges that you can use.
Coinbase is one of the veteran crypto exchanges and among the best for Bitcoin exchanges online. Anyone can use Coinbase, even newbies, to either make deposits or withdrawals of the best cryptocurrencies in the market. It boasts of more than 30 million users worldwide, and it can also accept debit cards, credit cards, and wire transfers. Furthermore, it means that any funds you wire to your bank account will get insured by FDIC insurance, ensuring the utmost safety of your money. Likewise, Coinbase mitigates losses by having an insurance policy worth $255 million. Moreover, when hackers take advantage of Coinbase’s reserves, users’ accounts will still be safe.
Binance is a cryptocurrency exchange located in Malta with multiple branches globally. It has over 200 coins, including Bitcoin and its native coin, Binance Coin. You need not worry about security because of their Security Asset Fund for Users (SAFU), which ensures that your funds are safe from theft. Binance uses SAFU to safeguard the future interest of users. It does so by allocating 10% of all the trading fees received by SAFU to enhance the protection of their users’ funds in extreme cases. However, it’s essential to consider that Binance’s 2FA and ID verification processes can take much of your time while setting up.
Bittrex was founded in 2013 in Seattle, and it has proved to be one of the best exchanges in terms of security. Interestingly, the exchange has never experienced any security breach since its creation, which is quite formidable in the cryptocurrency frenzy. This is because the owners have so much faith in the platform. You can see this from their willingness to offer full insurance, which equates to 80-90 percent of the user funds in the event of a breach, which is highly unlikely. In addition, Bittrex has a 2FA authentication and a multi-stage wallet strategy that makes sure your funds are securely kept in cold storage. Nonetheless, something that can put you off is that it allows only wire transfers for all withdrawals and deposits.
A secure exchange is crucial if you want to ensure that your funds are always safe. That is why the exchanges mentioned above are the best in a frenzy regarding security in the crypto realm. Moreover, it’s advisable to stick with more popular exchanges which already have a large customer base. That’s because it’s riskier doing business with smaller or newer exchanges that don’t have their security measures and offerings spelled out clearly. Otherwise, steer clear of any exchanges with a horrible history of security breaches, and your funds will be safe. It would be best also to do more research on any exchange before you entrust all your funds to it.