Bitcoin has proven that it is built on strong grounds. Consider that it has been there for 12 years, while dozens of other cryptocurrencies have emerged since then. Ever since hackers and scammers have stolen cryptocurrencies worth huge sums from the exchanges.
While the crypto industry is booming on a regular basis, larger amounts of crypto necessitate greater accountability with a highly stronger security. This is true for both customized and whitecrypto exchange. If cryptocurrency security in the space is not enhanced, the adoption of crypto will be limited since new people will be hesitant to use crypto. Nearly every single day, we get new updates regarding the breach of sensitive data or hacking of a crypto exchange.
The crypto exchange that was hacked was never a better deal. Not only are there more and more of them, but they also hold considerable amounts of money. Why wouldn’t someone want to make a fortune overnight just by discovering a security flaw in a crypto exchange?
For the time being, just be a little more serious. Cybercriminals have been in the industry since the internet’s inception. As a result, it is reasonable that they are active in the crypto market right now, where significant money is moving.
Cybercriminals have multiple possibilities for inserting harmful code into the crypto exchange or at least a portion of it. It might be anything having access to confidential data, for instance, any employee’s machine or could be the server.
How are cryptocurrency exchanges kept secure?
#1. Cold Wallets Storage
In 2018, Coincheck, a Japanese crypto exchange, faced a severe hack, losing over $534 million in NEM coins due to a vulnerable hot wallet lacking multisignature security. This incident emphasized the vital need for a hybrid wallet approach, utilizing both hot and cold storage to mitigate risks. By segregating assets between hot wallets for immediate transactions and cold wallets for offline security, exchanges can significantly decrease vulnerability to hacking. Some exchanges, like KuCoin, have implemented this strategy by introducing separate Main and Trading Accounts, enhancing security and customer trust in the crypto space.
#2. Authentication using two factor
In this industry, two-factor authentication (2FA) plays a crucial role in addressing security concerns. While passwords can be vulnerable to cracking, 2FA adds an extra layer of protection beyond just password reliance. Users often lack experience in creating strong passwords or reuse them across multiple accounts, increasing the risk of breaches. Hackers exploit various tactics like keylogging to obtain credentials, then patiently wait for opportune moments to strike. Multi-factor authentication, commonly via text message, email, or specialized mobile apps like Google Authenticator or Authy, provides an added security measure by requiring a secondary confirmation step during sign-ins or transactions, bolstering overall account security.
#3. The account associated with a given IP address
Although not as commonly utilized, restricting account access to specific IP addresses can significantly impede cyber attackers. Linking a crypto exchange account to multiple IP addresses makes it substantially more challenging for unauthorized access. While major exchanges track IP addresses used during login for informational purposes, this practice lacks explicit warning to users. However, leading exchanges are beginning to proactively notify users of any suspicious activities, such as logins from unfamiliar locations or devices, enhancing account security by alerting users to potential breaches.
#4. Message alert when the funds are dedited from the accounts
One other vital security precaution is notifying the account holder when payments are debited from the account. Along with the withdrawal alerts, they also give the deposit notifications. All this warns the account holders to become more cautious before something unfortunate happens.A few exchanges go far beyond merely sending email withdrawal notices. Furthermore, they provide you the option of clicking the active button right in the body of the email, which may result in the transaction being annulled or even an account closure if any unusual or suspicious actions are detected on our account.
#5. Withdrawals are blocked after updating account information
Changing account data, such as related email addresses or phone numbers, is typical hacker behaviour. After gaining access to the account, the attacker must guarantee that any possible withdrawals may be authorised via his controlled phone or email.Crypto exchanges prevent the types of malicious actions that hackers often participate in by blocking withdrawals for many days, if not a week or two, after altering some account settings. The hacked individual must be uninformed of the attack at least until the withdrawal is verified if the hack is to be effective.
#6. Presence of an anti-fraud unit
One of the company’s essential points is the anti-fraud section. The availability of such a section is quite beneficial, particularly for large corporations and whitecrypto exchange, in terms of avoiding and identifying any misbehavior. All exchange personnel should be knowledgeable of fraud prevention and detection even before it occurs. One of the most crucial measures is to educate one’s own personnel.A firm that has a dedicated section devoted to fraud detection, on the other hand, sends a significant message to its clients and shareholders. A warning that the firm takes the combat against scammers and hackers seriously.
#7. Funds for customer insurance
In general, there are 2 techniques for ensuring that monies are retained on the exchange. The first is given by a third-party insurance company, while the second is backed up by an internal policy or guideline. Because when assets are stolen or lost, exchanges must compensate their clients’ losses; otherwise, fines may result in the firm’s liquidation.
#8. Security audits of crypto exchange
The periodic security audits of the cryptocurrency exchanges are comparable to client insurance funds, providing two key services for the exchange operator. An audit may not only reveal security vulnerabilities in a customized or whitecrypto exchange, but it also increases investor trust and legal certainty. To guarantee compliance with regulatory frameworks, many nations rely significantly on audits. Money laundering and fraud of any form should be limited in order to obtain greater confidence.Multiple types of audits, but for crypto exchange-related businesses, System and Organization Control audits are the most crucial for crypto exchange-related organisations since they are used to objectively discover possible trading threats and inform customers that your organization has robust and efficient measures in place.
Wrapping It Up
The whitecrypto exchange firm may be extremely profitable, but security must come first. Inevitably, the risks overshadow the potential profit. A focused cyber attack on assets stored in bitcoin exchanges has the potential to transform everything.
Take into account the number of cryptocurrency exchanges that have been hacked in the past. Some of them, such as Mt.Gox, Cryptsy, Cryptopia, and BitGrail, no longer exist.