Ever since its advent crypto has steadily risen in popularity as an asset class investment in recent years. In fact, with every passing day, more people have started investing huge amounts in this new virtual digital asset. According to a leading crypto website, CoinMarketCap, the current market cap of the global crypto market is $1.35trillion. So, needless to say, with volume of transactions like that there might be a huge risk of money being siphoned off by hackers. The number of cyber-attacks might not be too astounding to set the alarm bells ringing, but the increasing number of such incidents is indeed something that all crypto exchanges and digital wallets must take care of.
A crypto exchange platform is basically an app that allows an investor to start investing in the various kinds of available crypto tokens, a kind of a digital wallet where all the crypto investments and transaction details of a person are stored. Thus, crypto exchange apps act as the interface between the investor and the crypto market. It is an indispensable part of the crypto investment framework. Choosing the best and safest crypto exchange platform is thus one of the most important steps in the journey to start investing in crypto. So, in this article, we will try to explain a few important and standard safety features that a safe crypto exchange platform must-have.
Standard safety measures that a Good Crypto Exchange must have:
Two Factor Authentication: Two-factor authentication is a tried and tested safety measure which is used not only to secure crypto wallets or exchange platforms but also to secure most forms of digital transactions. What a two-factor authentication system usually does is that it adds an additional layer of security over and above the regular user password security barrier. With a two-factor authentication system in place, a user will generally receive an OTP(one-time-password), usually on their registered mobile numbers, without which they will not be able to complete any sort of transactions. The two-factor authentication system thus reduces the chances of fraudulent transactions, because, with this security feature in place, it is almost impossible to carry out any transactions without the knowledge of the account holder.
Cold Storage Wallets: The concept of cold & hot storage wallets is pretty simple and straightforward. Most of the crypto exchange platforms use the hot wallet storage format. In the hot wallet storage system, the exchange platform stores all the assets/tokens of a user online, in one single wallet. This can be a serious security issue as hackers can hack into these online wallets and have unhindered access to the user’s account. The exchange platform with cold storage option allows the user to store a part of their crypto investments/tokens in an offline wallet. The cold storage wallet feature thus helps in reducing the chances of the investor’s investments and other essential data getting stolen. Nowadays, many exchange platforms have started providing a mix of both hot and cold storage wallet systems.
Insurance Funds: As the name clearly suggests, this safety feature ensures that all the investments of an investor are safeguarded and insured against any fraudulent transactions, by the crypto exchange platform itself. The funds/investments of an investor can be insured by the exchange platforms in two ways – either by the help of an external insurance company or by the assurance of some company policy. Having an insurance policy in place is like reassuring the user that even if his account gets hacked and all his investments get stolen, the exchange platform will take the responsibility of covering up all the losses incurred.
The safest crypto exchanges generally have a combination of all of the above-mentioned security features, in addition to some extra features as well. CoinDCX, India’s biggest crypto exchange platform for instance has robust security that includes Cold Wallets, Two Factor Authentication, Insurance policy & Infrastructure Security measures. These security measures make CoinDCX one of the safest crypto exchange platforms in India. So while choosing the best crypto exchange for yourself, please make sure that the platform you are choosing offers at least the security features mentioned in this article, if not more.