by Natalie Stevens
Cryptocurrency has grown ever more popular in the past few years with more people entering the market to do business. With more people making exchanges though, one thing has been at the forefront of everyone’s mind: security. Millions of digital dollars have already been stolen by hackers, making people more wary about their next exchange.
However, where do such hacks originate? Well, the main causes of these security issues are often intricate and complex. But you can prevent or limit these breaches from happening with a robust security approach in mind.
So, before you get to invest in cryptocurrency exchanges, do learn a little more about the security issues and recommendations first.
Cryptocurrency security issues
There have been recent cyber attacks on a few cryptocurrency exchanges lately, including Bancor, a startup converting cryptocurrencies, and Zaif, a Japanese company that lost $60 million in a hack.
Unfortunately, hacks like this have been far too common, leading to questions about the current security standards and recommendations for cryptocurrency exchanges.
One of the biggest security issues is data hacks. There is the potential that all your information is stored in one place that may only have a single point of entry needed to access this information so it can be easy for hackers to break into the system.
Another problem is trust, meaning the trust that people place in the system to keep their information safe. So far, this trust hasn’t really been earned with so many hacking issues.
Security recommendations for cryptocurrency exchanges
As cryptocurrency exchanges work to find security solutions, one company has instituted a plan meant to address these issues. The Vietnamese company, Huobi, has begun to work with protection funds, using around 20 percent of their income to buy back a large amount of HT.
Using this HT, they’re able to reimburse any users who have been victims of security problems.
They’ve also begun using a security reserve, which will keep 20,000 Bitcoin at an independent address. These coins will also be used in the case of any losses, but to help prevent these losses in the first place, Huobi has inputted wallet protection. They store 98 percent of client funds in cold wallets to improve its safety.
With the new SMARTChain evaluation model too, which works with stronger internal procedures, it’s much more difficult for fake coins to be listed. Using this and the cybersecurity protections to prevent criminal intrusions, they hope to improve security overall and account for losses if they do happen.
To secure your cryptocurrency exchanges, here are three things to consider.
Create security standards
There have been some suggestions about establishing security standards rather than regulations, which would allow the industry to police itself without stifling innovation and the involvement of new companies.
Using industry standards, different exchanges and companies will be able to become voluntarily validated to protect the assets of their customers. Like this, the customers and developers can align to find those security risks and prevent greater losses.
A standard can be created to insure the funds under management or use a digital custody service. Basically, this means that the insurance would use their standards to determine what would be covered in the case of loss and to prevent that loss in the first place, would assist in inputting security requirements.
Some security options might include systems to block hacking techniques, like an encryption website, multifactor logins that use captchas, text messages, or biometrics. All of these are meant to prevent an attack before it occurs.
Learn and understand the requirements of cryptocurrency exchanges
Part of security is keeping the users educated on the requirements to exchanges. This might include a series of videos that help customers learn about security issues on their computers. There has also been some talk of exchanges providing free security tools to customers to protect them, like malware protection or antivirus software.
Allow blockchain developers to strengthen the system
Blockchain developers like Blue Chip Vision may also be induced to follow a set of standards, even though this might be a little tough to institute between companies. Quantum-resistant blockchains could become standardized so that users can rest assured that their money is completely protected.
Before you get involved in the cryptocurrency exchange market, take a look at what security measures protect your information. Security is important when it comes to doing your exchanges online.