How to secure your cryptocurrencies on an exchange ?
In this article, I will give you few advices that you must follow to secure your exchange account or you may loose your crypto forever…
As you already know, many centralized exchanges (CEX) have been hacked during last years. They have lost the equivalent of several billions of their customers, that are never reimbursed most of the time. So here is my advice number 1:
Never use a cryptocurrency exchange as a permanent wallet:
A crypto exchange is just a tool / a service to exchange an asset to another one. Many users see exchange wallets as the perfect wallet because it is very convenient (no blockchain to synchronize etc…) and they store on them their coins and tokens, thinking they are safe till … someone hack the exchange and steal all funds. Then they can just hope their plateform will reimburse them.
If you never let your assets on exchange wallet, even if a hack occurs, nothing can be steal from you, cause there is nothing to take!
So how to use cryptocurrency exchanges perfectly / the safest way?
- Deposit your coin / token / fiat money to the exchange.
- Buy / Sell.
- and WITHDRAW all to an offline wallet ! NOTHING MORE ! (+disconnect from your account).
I admit that this method can’t suit all traders. A part of them want to trade longer term positions like days, weeks or even months, or an order may need time to be filled. As a consequence, they need to keep assets on the exchange. This leads me to my second advice:
Choose a cryptocurrency exchange that follow best security practices:
To reach a good security level, an exchange need to:
Take all dispositions to secure its systems and cryptos by using:
- Hot/cold wallets : majority of assets are kept in offline wallet to limit losses of a potential hack.
- Encryption of data : even someone succeeds to steal them, they will be useless.
- Multisignature-wallets : several signatures are needed to create a transaction instead of one.
- 2FA (at least with mail) when a withdrawal is requested.
Give users best tools to secure their account:
Be carefull, the access of your account is under your responsibility. You need to protect it from anybody. The exchange will accept no liability for any loss, due to an unauthorized access if you didn’t secure enough your account.
You need to use all security tools the exchange gives you like:
Enhanced password (click to get more information).
Two-factor anthentication (or 2FA) .
If an exchange doesn’t propose you these two basic security tools, just choose another exchange!
People usualy don’t consider it as a way to secure an account. But it is! If you loose your password / 2fa codes, and if you have already filled the KYC procedure of your platforme, it will be easy to prove you own the account by sending a copy of your ID a second time.
Thise measure will ask you a second method of authentication if you connect to the platform with an unknown IP or device. Generaly, you will have to enter a code or click a link sent to your mailbox.
It’s a little code, most of the time composed by numbers, that can be asked when you do some operation on your account like asking a withdraw, opening an order …
Activity logs / notifications:
These logs are normaly activated by default, if not, activate them, it may help you to identify unauthorized access to your account so you can take countermeasures as soon as possible.
White IP list:
A powerfull tool wich will allow access to your account only if your IP is on the list.
It is a little code that will be written on all mails comming from the exchange. It will serve you to authenticate real from fake / scam mails. Simply : when this measure is activated, if a mail, supposedly from your exchange, does not contain this code, be very carefull with it (or just flag it as spam and delete it).
When you deal with an exchange, it’s not only the exchange that has to be secured! Don’t forget your device which serves you to connect to the exchange:
Secure your environment:
Even if the title of this article says “on exchange”, your device will be connected to your account through an internet connection. Consequently, if your device or connecion are compromised, you may have a security issue, that’s why I prefere writting few words about your environment.
Secure your device:
Here are few things you can do to reduce risks comming from your computer / tablet / phone. I will just enumerate them here (non-exhaustive list).
- Use an antivirus/antimalware.
- Use a firewall.
- Keep up to date your OS and softwares.
- Only install trusted programs from a trusted source.
- Never click on suspicious links/attachments.
- Never use public devices!
Secure your Internet connection:
To limit risks coming from your connection (non-exhaustive list):
- NEVER USE PUBLIC WIFIs ! Your data like passwords can be easily intercepted.
- If you use WIFI at home, be sure you re using a WPA2 encryption method with a strong password (60 characters long, upper / lower case, numbers, special characters).
- A VPN can be an extra layer of security for your connection if it encrypts data.
We arrived at the end of this article. I hope it will help you to keep your digital assets safe on crypto exchanges. If you want more information on something or i forgot something important, tell me in a comment. Thank you !
Don’t leave without reading:
_ Comparison of the best crypto exchanges – Find the best crypto exchange in few seconds!
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