Your security matters when it comes to Bitcoin trading. What would be the point of making such a significant investment only for your profit to be stolen on a Bitcoin trading platform? That is why you need to trade on a platform that offers top-notch security.
Choosing a secure website for Bitcoin trading is not a straightforward matter. It is necessary to conduct thorough research on each of the options available for you to make an informed decision.
The essence of this guide is to highlight leading Bitcoin trading sites in terms of security. Creators of websites listed here have demonstrated an understanding of the need to prioritize security in the dangerous online world.
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Are Bitcoin trading sites safe?
As the Bitcoin mania maneuvers all over the world, one thing that we are left to ponder over is whether we can be sure about the safety of Bitcoin exchange platforms. Generally, the exchange platforms face a couple of vulnerabilities that we ought to know.
1. Phishing attacks
Phishing is the most common fraud hacker in the bitcoin app. It is a type of social engineering attack designed to steal user data like credit card numbers and credentials. The attack happens when the hacker pretends to be a legit entity and dupes the victim into opening a malicious link. Upon doing so, malware is installed on your computer to reveal sensitive information.
A phishing attack is devastating in the cryptocurrency world as it leads to theft of funds, identity theft, and unauthorized purchases.
2. Exchange site mismanagement
Besides hackers posing a threat, exchange sites themselves may be vulnerable when the owners or operators are not credible. Naturally, the platforms can suspend any illegal accounts. As they do so, they may end up suspending accounts that are operating just fine for their selfish gains.
Such an issue has happened before with Poloniex accounts where verified accounts got suspended. Users claimed that they were unable to recover their accounts even after communicating with customer support.
3. Consigning personal identity information
Leaking of your personal information on a Bitcoin trader app is a key vulnerability. As part of the verification process, members are often asked to upload certain documents like Bank Statements, National Identity Cards, Utility Bills, among others.
As you sign up, you risk providing these sites with a lot of personal information, even though they may not be regulated. Even if they claim to have a data privacy policy, what they do with this information remains in their discretion.
Choosing a secure bitcoin trading platform
How can you be sure that you are working with the right platform in the wake of all these vulnerabilities? There are a couple of factors that you can consider to be sure you are on the safe side:
1. Multifactor authentication
To choose a secure Bitcoin trader app, go for one that has 2FA. The implication of this is that whenever you make a login request or vital transaction, a code will be sent to your mobile phone. Without this code, the transaction will not go through.
Several authentication apps are available for the implementation of 2FA. Authy, Microsoft Authenticator, and Google Authenticator are some of the most popular. The apps continuously generate passwords that are active for a maximum of 30 seconds. Thus, you must have your mobile phone with you to read the code and finalize a transaction or login request.
2. SSL Encryption
Websites improve their technical security through the use of SSL certificates. This is an encryption mechanism that ensures everything on the exchange platform follows the https protocol, which is more secure. You should always determine whether the site has an SSL certificate installed by looking for a padlock icon on its URL.
The encryption is important more so on websites that need a login, consequently transmitting data. When you do so, your data will be transmitted via an SSL connection such that third parties do not stand a chance to read your data.
3. Deposit Insurance?
Whereas the IT security side of the exchange is important, you also need to consider deposit security. In the past, all your bitcoins were often left in your exchange account. Doing so posed a great threat because hackers could easily find brilliant ways to transfer them away. The sites maneuvered around this threat by implementing cold storage. That is, the coins are stored externally rather than directly on the trading app.
Even with these tricks, attacks can still happen. One might need some form of insurance from the exchange. However, cryptocurrency brokers and exchanges cannot get insurance in the same manner as financial institutions do. Instead, what they can provide is some form of in-house loss management strategy. The exchange could offer to cover hacking losses to a certain extent, just as Bitfinex and Binance did.
4. Protection against price manipulation
Concerns regarding price manipulation are rife more so among CFD brokers where trading happens on margin. Given that each trade has fixed liquidation, the overall operation of traders is based on faith that the price cannot be manipulated artificially. For instance, individual traders with large trading volumes should not trigger a price fluctuation in the short term.
It is paramount to watch out what the Bitcoin trading site does to prevent price manipulation. Failure to do so amounts to trading in naively.
Top trading platforms with decent security features
Different Bitcoin trading sites have done a tremendously admirable amount of work to make sure that they lift up their security. The following are some of the most secure Bitcoin trader apps.
#5: Binance
Binance was created in 2017 and offers some of the most comprehensive services. Traders are given an opportunity to trade CFDs with leverage in addition to buying Bitcoin with cash. The site also provides Bitcoin Futures Trading.
Ever since its inception, Binance has undergone significant evolution. However, it has also had its fair share of challenges, including a 2019 hack where close to 7000 bitcoins were stolen. Even though this number sounds huge, it was about 2% of user deposits stored in hot wallets. The other 98% stored at Binance was not touched as it was safely kept in cold storage.
The affected users were fully reimbursed, and the hack served to increased trustworthiness in the company. It showed that the platform has a plan just in case users were to experience a similar attack again.
#4: PrimeXBT
The exchange platform is relatively young, having been recently launched in 2018 and did not gain popularity until 2019. The advantage of its youthfulness is that it has learned about the security mistakes of its older counterparts and took relevant measures to mitigate them.
A quick look through the site shows that it fulfills the criteria described above. It is yet to be hit by a hack, and that seems to be less likely to happen. However, given that there is no specific individual associated with PrimeXBT, it can be quite a challenge to increase a user’s trust in it.
#3: Bitfinex
Bitfinex has faced two hacking events since its inception, with the last attack taking place about three years ago. In either of the two attacks, the company seemed to have learned some valuable lessons that it used to improve security measures. Scanning through the site shows that its security merits follow the latest standards.
One thing that is undoubted is that the two hacking events shook the trust of some traders in the platform. However, its continued growth in recent times shows that the platform has gained the faith of its traders based on the security strategies put in place.
Bitfinex played out its cards well in 2016 through proper crisis management by shelving its users from losses emanating from the hack.
#2: Kraken
Kraken has been gaining increased popularity in recent times and for a good reason. The exchange platform has a wide range of currencies under its portfolio. Also, the design is appealing and runs smoothly. However, its top-notch security features are what have served to fuel the popularity.
Bitcoin participants are more interested in security today than ever. Kraken understands this and has remained compliant with industry standards. Each account on the platform has the GSL and 2FA security protection, which help keep hackers at bay.
Storage of coins takes place in cold and semi-cold wallets. The few hot coins left on Kraken are to be used for the site’s operations. Furthermore, users are given a great amount of control over their security so that they feel their account and information is safe.
#1: Coinbase
The popularity of Coinbase cannot be underestimated, with more than a million users registered on the exchange. The high uptake is for a reason considering that it is user-friendly and offers swift operations like instant purchases. Furthermore, Coinbase supports credit and debit cards in addition to setting the standards for professional operation in the cryptocurrency industry.
Security is treated with the utmost seriousness that it deserves on the exchange. The platform maintains a multi-coin wallet, has verification mechanisms, and a favorable data privacy policy. To set it apart, Coinbase has entered into partnerships with several institutions to insure deposits, something that does not often happen amongst crypto exchanges.
Conclusion
The security of your money is paramount. You ought to take your time and assess each Bitcoin exchange before deciding that it is worth your investment. Evaluate these websites by following the metrics shared above to be sure that you are on the right track.
