AiBB keeps security at the fore of its own application connecting exchanges and traders for a seamless experience backed with Ai. But even without using a trade advisor, traders can take some basic steps to improve security and be more confident trading cryptocurrencies.
Cryptocurrency Security is Volatile
Just this month, two writers for The Wall Street Journal said that “cryptocurrency exchanges are getting hacked because it’s easy.” That was following a major breach in which millions were stolen by exploiting chinks in the armor of smart contracts.
But it goes to show that vulnerabilities are all the rage. They’re broadcast widely, and honestly, they can do a lot of damage to exchanges and to the reputation of the industry in general.
Too often, bystanders are tempted to watch fintech newcomers to the banking scene. They are using new currencies and lean budgets, stretching themselves thin to care for the billions in funds entrusted to them. They are, after all, only start-ups. They do not have the resources of national banks and regulatory agencies behind them, so cryptocurrency security is often lax.
But billions are at stake.
And those billions are growing.
Cryptocurrency Security is Changing the Exchanges
Cryptocurrency markets topped $800 million this year, and unlike traditional stock exchanges, they often hold coins for investors. This makes the exchanges different from typical stock markets, where coins can only be traded. It also means thieves might be able to reach coin stores and make away with millions. Further, cryptocurrency exchanges are many and multiple.
Multiple exchanges mean many logins, all with different coins and different cryptocurrency security procedures.
There are centralized exchanges, most vulnerable to hacking, but safer for users to establish ownership over their own coins. Decentralized exchanges mean peer-to-peer trades, more autonomy, fewer hacking opportunities, and also more chance users just plain lock themselves out of their investments. They’re less liquid, which dampens their ability to replace centralized exchanges entirely. Hybrid exchanges attempt to be both secure and decentralized.
Some of each type deal in crypto while some convert to traditional currencies, or FIAT currency. Thus finding the right coin pairings on the right exchange and then storing currency safely is a tough job. Traders can’t rely on decentralized exchanges and still make the most successful trades at the right time.
It gets even tougher when an investor uses multiple exchanges to find the right pairings at the best price and maintain liquidity to exchange coins for fiat and withdraw currency whenever they like. Trading becomes a security nightmare to an exponential degree.
Keeping Trading Safe
What can a would-be trader do to maximize the chance of trading successfully in all these places without falling prey to a hack? We’ve been building AiBB, an Ai-based trading platform that connects to multiple exchanges, so security’s on our minds all day. Whether or not you use our assistant, these tips will still help you protect your investment.
1. Due Diligence
It’s not high-tech, but when was the last time you checked out an offer for storage or a new wallet? Due diligence means finding evidence for the claims made in an offer and a product. If you can understand the code, great, head to GitHub and check out a project’s claims it builds security features into its product like it says it does. You can also look for evidence there are trading controls, and understand where coins go when users put them in. How do they come back out? Where are they stored? How secure are the smart contracts that control trading those coins?
2. Cold Storage
It’s not very liquid, but if you’re holding coins and not cashing out anytime soon, storing them offline is the safest way you can ensure they’re safe. Some of your investments should be set aside for longer-term holding, and there’s no reason to let these linger online.
3. Equipment Check!
When was the last time you ran anti-virus software? Are you trading on three or four different devices? A new computer, a clean software check, and vigilance online means keeping your risk low. A new phone that is used only for trading can also be a secure bet.
4. Try using an Authenticator and a Single IP VPN
Google is just one option that allows users to log in from a single IP address only. If you don’t surf with a VPN, this is an easy way to make sure all your transactions are coming from a single place and that exchanges recognize your computer and can alert you if someone tries logging in from a different device. If you do use a VPN, try a premium service with a single IP address whitelisted. Try to use a VPN. Do not trade on public internet networks.
5. Create a New Email Address for Trading
And use it. Don’t talk about the address. If the email is compromised, your trade history could be open to prying eyes who can then use your transaction history to work their way into your wallet. Make this email password strong.
6. Two words: Hardware Wallet
When trading frequently and coins can’t be in cold storage, they can be in a more secure wallet called a hardware wallet. It uses two-factor authentification to prove identity before transacting.
7. Get Better Facts
Due diligence is not about trusting people who have been watching the market. It’s about trusting thousands of data points that can come together to give actionable information that no one else can suss out of the millions of trades that occur daily. Don’t trust that a single exchange always has a decent price or that a single trader knows what they’re doing and their trades should be followed. Trust data, not traders. AiBB is helping fill this part of the security gap, searching for prices and signals across platforms. You can start to do the same to your own by following signals, reputable traders, cryptocurrency companies, and news.
Hacks are going to be less frequent with every technological advance to fill the need for greater security. Exchanges and currency issuers want value for their investors, and typically work diligently to ensure security. Ultimately, their success will be measured by a market where increasingly, newcomers feel safe and confident to trade. We’re all for that not-so-distant future.