here are plenty of ways in which a person can buy their choice of cryptocurrency in the market or sell them. The most popular and reliable method is to transact them on a crypto exchange. A crypto exchange, also known as a cryptocurrency exchange, offers the best features for buyers and sellers of cryptocurrencies.
They provide wallets for storing the coins. They enable easy purchases and withdrawals that are affected in a matter of seconds or minutes. Most importantly, they provide a safe environment for storing the coins. The last part is particularly significant.
The safety of your cryptocurrencies is paramount. People lose their stock of cryptocurrencies all the time. Some people forget the passwords to their account. Some people store their coins locally on their wallets in their computers, only to lose them due to a crash.
In some cases, people’s accounts are hacked and their coins stolen. But, all of these can be avoided with proper precautions. If people use reliable crypto exchanges to purchase and store their coins, then their account passwords can be recovered, and they can’t lose them accidentally either.
However, there is one area where any amount of precaution by the user cannot ensure 100% protection of their stash of crypto coins. That area is the security of the crypto exchange itself.
Here’s a harsh truth that everyone must know. Crypto exchanges are not 100% secure from the hackers, no matter how tight their security is, no matter how many advanced security features they install. In fact, there have been many instances of successful hacking attacks on crypto exchanges.
The biggest of the hacks happened in 2014, when roughly 850,000 bitcoins were stolen from the Japanese crypto exchange Mt.Gox. The value of the coins at the time they were stolen was $65 million. Today, they are worth more than $12 billion. That’s not an exception by any standards. In fact, there have been many more instances of crypto exchanges being hacked by sophisticated hackers.
In the light of so much risk involved in trusting a crypto exchange, it is important that you find a crypto exchange that offers maximum security of your digital coins. Here are some ways in which you can find out the most secure crypto exchange in the market.
Security and Verification Processes
Crypto traders do not always lose their digital coins to Hollywood-style attacks by sophisticated hackers who take down the entire crypto exchanges. Instead, the thefts are usually on a much smaller scale, often surgical even. Smart hackers get access to a small bit of information about a particular user, and then get in touch with the crypto exchange support team using that information.
If the support team is not vigilant enough, they end up unwittingly giving your account’s access to the hacker. And voila! Your account is drained of your stash of cryptocurrencies.
The thing is that the best crypto exchanges have a multitude of verification requirements that ask the users to share detailed information about themselves. Although this might feel like a pain in the beginning, it is extremely helpful in the long run. These steps keep your account secure, even if an online thief manages to find some information about you.
So, the more detailed is the verification process of a new user, the safer is a crypto exchange.
Who better to tell you how safe a crypto exchange is than the people who have used it! A quick visit to relevant forums such as Reddit, BitcoinTalk, and others can help you find out everything you need to know about a cryptocurrency. If any person has had a bad experience, especially in terms of security, with a crypto exchange, then that information will definitely be available on crypto forums.
If you cannot easily find the relevant information you are looking for, you can even post a question on a forum. You will probably get responses from the current and past users of various crypto exchanges, who would be happy to share their experiences with you.
Location is one of the most important factors that should be considered when choosing a crypto exchange. The best IT talent is found in technological hubs like the Silicon Valley. So, a crypto exchange that is located in any such tech hub automatically attracts the best IT talent in the world.
This means that they will have great minds working in the back end to ensure that the crypto exchange works flawlessly and with maximum security all the time. That’s not to say that crypto exchanges that are located elsewhere have dubious security. It means that when all else is the same, then location is a good differentiator.
Top 4 Crypto Exchanges by Security
Although crypto exchanges are understandably not very forthcoming about their security features, the factors discussed above can be used to rate the various exchanges as per their perceived security infrastructure. Here are the top 4 safest crypto exchanges.
Coinbase is definitely the most trusted crypto exchange currently in operation. It has served more than 10 million users worldwide. It has enabled crypto transactions worth more than $50 billion so far. In fact, more than $40 million worth of cryptocurrencies are exchanged on this platform on a daily basis. And, it supports users from 32 countries.
Coinbase has played a major role in legitimizing the cryptocurrency businesses and bringing them to the mainstream. It was launched in 2012, and was soon able to get the backing and funding from major investors in the market. It even supports cryptocurrency purchases through debit cards, credit cards, and wire transfers.
At present, it allows its users to purchase bitcoins, Ethereum, and Litecoin on its platform. It has its own wallet for storing the cryptocurrencies, and offers the wallet to iOS and Android users through native apps.
If you live anywhere in Europe, then Kraken is perhaps the best crypto exchange for you, because of multiple reasons. The exchange itself is headquartered in San Francisco. But, its highest volume of transactions happens in bitcoin-euro pairs. In addition to euro, the platform supports US dollar, Canadian dollar, British Pounds, and Japanese Yen.
This exchange was founded in 2011, and has a fantastic history. Since the Japanese crypto exchange, Mt Gox, fell due to the hack in 2014, Kraken was appointed to oversee the distribution of Mt Gox’s remaining estates among its users.
So far, there has not been a single incident of successful hacking on Kraken. Considering that the exchange has been around for 7 years now, it is no mean feat. The best aspect about Kraken is that it allows you to trade over a dozen different cryptocurrencies.
LocalBitcoins is unlike the other popular crypto exchanges. It is an over-the-counter crypto exchange platform. The users do not make transactions with the platform itself. Instead, the transactions are between different users. A seller, who has bitcoins to sell, posts an advertisement on the platform along with an asking price. Prospective buyers can contact the sellers and agree upon a system of transaction.
They can meet up and execute the transaction in cash, or pay via online banking. Either way, if the seller expresses an intent to sell to the buyer who gets in touch with them, then they can place their bitcoins in an escrow account. This way, the buyer knows that as long as they can show evidence of online payment, the LocalBitcoins platform will release the funds from the escrow account to them.
It is one of the most trusted platforms for trading bitcoins in the market. Despite being operational since 2012, the website has suffered no reported hacks, which is evidence of its solid security features.
While most crypto exchanges make it possible for their users to purchase crypto currencies using fiat currencies like dollars, euros, and so on, Poloniex does not. If you want to trade on Poloniex, then you need to transfer some bitcoins onto the platform first. Then, you can exchange them for any of the 60+ cryptocurrencies that the platform supports.
It was founded relatively recently in 2014, and yet, has developed a strong reputation among the hardcore crypto users. That’s because Poloniex offers advanced trading tools and analytics for its users to assist them in trading.
The US-based company offers an outstandingly secure environment for crypto traders. The fees are nominal. But, the biggest appeal of Poloniex is its privacy. Since it does not accept fiat currency, it does not ask for much information from its users about themselves. This is cherished by cryptocurrency users who are privacy conscious.