How to Protect Ourselves Against Frequent Crypto Exchange Attacks?
Past few years have witnessed the frequent crypto exchange attacks, causing many of its customers to lose confidence. With more cyberattacks projected to occur in the future, many traders are starting to lose their nerve.
The attacks are putting a spotlight on an area many investors are worried about—security. Something needs to be done in order for cryptocurrency to maintain its growth.
Decentralized Exchange VS Centralized Exchange
When it comes to blockchain, people are often reminded of decentralization. In fact, the crypto exchange can be divided into de-centralized exchanges and centralized exchanges according to the degree of de-centralization.
For decentralized exchanges, users trade directly on blockchain, where cryptocurrency is sent back directly to the user’s wallet or stored in smart contracts on blockchain. A decentralized exchange does not require any disclosure of identity, with a disclosure of identity only being required to the individual that you are conducting the trade with.
In the term “centralized cryptocurrency exchange,” the idea of centralization refers to the use of a middle man or third party to help conduct transactions. Buyers and sellers alike trust this middle man to handle their assets.
At present, most of the popular exchanges are centralized exchanges which adopt centralized technology. Traders need to register on the exchange platform and go through a series of identification procedures (KYC) to pass the audit.
Attacks have occurred both in centralized or de-centralized exchanges, In terms of trust mechanism, de-centralized exchanges have more advantages. As for transaction speed and depth, centralized exchanges have more advantages because of its mature technology.
Why the Assets in Crypto Exchange are Easy to be Stolen
Cryptocurrency itself is a crypto assets based on blockchain technology, that is to say, the stolen assets can easily transfer the stolen assets anonymously. Exchange hot wallets were stolen, such as Mt. Gox, Gateio and Bitstamp. Hot wallet is an online wallet connected to a network, because of being connected to a network, personal electronic equipment may be embedded by hackers into Trojan virus to steal wallet files and Private Key.
How to Protect Ourselves From Attacks
Crypto exchange practitioners, especially founders and core teams, have to face the dual challenges of regulation and technology. Exchanges must strict code audit, system security testing, multi-dimensional risk vulnerability testing to ensure the security of the system.
As for traders, we need to be aware of risks. We must always grasp the initiative to protect our assets. Passwords set on one trading platform should not be used on other. Guarantee that the private key will never appear on the network, and s owned by yourself only. Funds kept in a hot wallet (a wallet connected to the internet) should be limited. Consider installing virtual machines to protect Bitcoin wallets, an operating system for hot wallets, and another for cold wallets. You can put crypto assets in hot wallets for day-to-day transactions and the rest in cold wallets.
Last but not least, investors should also ensure that they use exchanges that offer solid insurance for their funds. This will bring a substantial amount of relief if ever a breach occurs.