In plenty of crypto exchanges, some are proving they are worth trusting, and some are being easily hacked. I’m not going to suggest which one to choose and won't give any referral links. I just wanted to share with you the list of most trustworthy exchanges based on our researches.
Most of the newbies in the sphere are thinking that it’s impossible to hack the blockchain system, which is theoretically correct. However, not all the cryptocurrency exchanges, and most popular of them are not running on the blockchain, which makes them vulnerable to the same cyberattacks that any project may face.
While with fiat money you can get your funds back by declaring about a hack of a bank account. With blockchain, that is impossible, cause you can't make any changes in the completed transaction. That’s why cryptocurrency exchanges must pay higher attention to security.
An important point that is guaranteeing security is the licensing. The most popular jurisdictions for getting a crypto license are Japan, Estonia, USA, United Kingdom, Hong Kong, and Singapore. For having the license, the exchange must correspond to AML standards. It must implement procedures of complex risk analysis, qualify its personnel, plan inner certificates to reduce risks of money laundering, and report activities concerning suspicious transactions and regularly notify the authorized institutions about such transactions.
Paying attention to a type of cryptocurrency wallet is also important. Storing the largest part of funds on a cold wallet is the optimal choice for security. For making instant transactions, you can keep a small amount of crypto on a hot wallet. This will decrease the risk of losing money. Read more about cold and hot wallets here.
And, finally, the list of the most successful (or maybe lucky) exchanges that have never been hacked:
Coinbase is one of a few exchanges that has a license in NY under the pilot BitLicense program. Here is why it has to stick to certain laws and regulations, which are making the exchange more protected. To be able to trade, Coinbase users are required to pass a KYC process.
CEX.io is an exchange that is listed as a Money Services Business with FinCEN in the USA. The factor that ensures it is secure is that it has a level two DSS certificate. For having a verified account on this platform user has to provide private info, so the exchange can make sure it complies with AML and KYC regulations.
Kraken is also one of the most prosperous exchanges, which has never been hacked. Most of its currency is kept offline. The system also suggests two-factored authentication for accounts. Kraken’s two-factored authentication is not the usual one. It is when the user has two kinds of a password: one is set up by the user, and the second is created by an application like Yubikey or Google Authenticator.
Gemini is managed by the New York State Department of Financial Services. That is why the exchange has to require consumer protection, cybersecurity, anti-money laundering, and capitalization requirements. This exchange takes a variety of steps to ensure consumer funds are held securely. The majority of crypto funds are saved in offline cold storage, rather than hot wallets. Multi-Signature technology is applied to reduce particular points of collapse. These offline wallets are stored in multiple secured facilities.
A financial giant Goldman Sachs assists the security and risk control of Huobi. The exchange itself utilizes the HT token to set up an investor safety fund. The platform has an independent crypto analysis system that is meant to keep possibly spiteful coins from being traded on the exchange.
The parent company of this exchange is Quoine, and it is authorized by the Japanese Financial Services Agency. Liquid has actualized a range of against tax avoidance and security efforts to defend user funds. Before starting trading on the platform, you have to provide personal data. All users have two-factored authentication, and there are no API withdrawals. This and other extra features of Liquid ensure its safety.
These were the six most trustworthy cryptocurrency exchanges that have not been hacked and everything about their security systems. Now you can do your research and decide which one to choose.
Blockchain Today’s Editorial Team was not involved in the creation of this post.