Being a crypto trader, you have to ensure that your assets are safe. In this article, we will explore some of the best practices that you should use to ensure safety of your assets.
Are crypto exchanges secure?
When you trade on centralized crypto exchanges, the company is responsible for the custody and security of your crypto assets. Their security protocols also depend on how much resources and commitment they give to security of customers’ assets. Crypto exchanges secure the users’ assets through multiple layers of protection including account security measures, web security protocols and firewall, corporate and organization safeguards. Crypto regulations that are enforced by regulatory bodies also adds another layer of security. Before choosing any crypto exchange, consider having a look at the security features like cold storage facilities, and security audits that company utilize.
Despite the advanced security measures that the leading exchanges like Crypto.com and Binance take, it is still necessary for user to take measures on his side to add another layer of safety. You can also store your crypto in wallets. Hardware wallets are a great option to secure your assets. On the other hand, soft wallets are relatively less safe because they are connected to internet and there remain chances of being hacked. Hybrid wallets are also a good option.
Safety Practices for Centralized Exchanges
- 2-Factor Authentication
Even if you have stored your funds on a highly secure centralized exchange, taking further measures for your account safety remain crucial. These measures include turning on 2-Factor Authentication, or utilizing Authenticator App, and making a strong password. If a crypto exchange does not offer 2FA option, do not use that platform.
- Avoid Phishing Attacks & Malware
You need to ensure you always enter your login details in the actual website of crypto exchange by checking the URL. Hackers often create fake website similar to a crypto exchange to get user login details if users enter those. They can also create fake wallets or send you emails asking you to download a specific crypto application. Those applications may have malware, so avoid such emails from unknown sources.
- Other Practices
Enable whitelisting withdrawal address option if available. Through this option, you withdraw funds to pre-approved wallet addresses. This prevents unauthorized withdrawals. Secondly, keep monitoring your account activity, transaction history and balance. Turn on account notifications so you receive notifications about your account activity.
Safety Practices for Decentralized Exchanges
- Use Secure DEX
In DEXs, users have full control over their assets. They are responsible for protecting their private keys to avoid getting hacked. Another point where safety is required is the smart contracts which execute peer-to-peer trade between users. If a DEX has highly secure smart contracts, then chances of platform getting hacked remain low. Before choosing any DEX, research about platform’s reliability and security practices.
- Utilize Hardware Wallets
When it comes to DEXs, you can store your assets separately in a hardware wallet. It is a physical device which is not connected to internet. These wallets have robust security and they are extremely difficult to hack. But you need to keep your seed phrase safe.
- Avoid Phishing Attack
DEXs don’t really ask for private keys unless you are making a transaction. Avoid entering seed phrases and private keys when asked on a DEX application or similar website. When choosing a crypto wallet, verify its reliability, reputation and other security features.
- Other Practices
Many DEXs also offer option of 2-Factor Authentication. Turn on this feature whenever possible. When making transactions, double-check the transaction details like recipient address and amount.
Utilizing Crypto Wallets
Apart from soft and hard wallets, there are other types of wallets that you can utilize, including hybrid wallets. They combine features of hot wallet and cold wallet providing more security than hot wallets. These wallets use secure smart contracts, distributed key management and multiple signatures which gives advantage over hot wallets.
Among all types of wallets, cold wallet remains the most secure wallet. It is not connected to internet so chances of being hacked are extremely low. Even if someone steal your hard wallet, he cannot access your funds because they are protected by recovery seed and PIN. Only physical damage to hardware wallet can actually make the device inoperable.
Conclusion
While many crypto trading platforms promise security of customer funds, researching about them thoroughly is still crucial. Additional measures like 2-Factor Authentication, also adds another layer of security for your crypto assets. It’s important to take security measures for both decentralized and centralized exchanges. Cold wallet remains a robust safeguard for your crypto.