Cryptocurrency space is expanding with rocket speed. There are already more than ten thousand cryptocurrencies, and developers add a new token every day. The biggest losers and biggest gainers are filled with new cryptocurrencies only in the coin market cap. Some of these new ICOs and cryptocurrencies are just rug pulls.
An investor should blaze the trail of considering potential ways to invest and store cryptocurrency assets. In short, an investor should carefully check the cryptocurrency trading venue—profound exchange ease buying and selling of these virtual coins. To know more about cryptocurrency trading, check CFD Trader. Below is a complete overview of cryptocurrency exchange, and here are some practices to follow while choosing an exchange.
Undeniably, cryptocurrency is mainstream nowadays, but Ponzi schemes, theft elements, and malicious activities are still there and can dramatically impact an individual’s real life. Cryptocurrency scams like extortion, blackmailing, investment rug pull, and many more can destroy the mental peace of an investor. One famous example of a cryptocurrency exchange scam is Mt. Gox.
It was a viral cryptocurrency exchange and acquired traction from every enthusiast in early 2013. However, in 2014 hackers noticed some loopholes in the security protocols of this exchange and started to exploit these loopholes. As a result, hackers stole nearly 800K BTC from this exchange and just disappeared.
Almost after seven years, Mt Gox publicly says that the company is bankrupt and has no money to return to investors. Somehow, the company has managed to return 100k BTCs. In short, cryptocurrency exchanges are subjected to many risks nowadays. You might think about how to monitor the legitimacy of a cryptocurrency exchange. First, you should keep an eye on the physical address given by the exchange.
An investor should avoid using the cryptocurrency exchange devoid of a physical address. Limpidity also demonstrates the legitimacy of an exchange. The majority of the international cryptocurrency exchanges are based in China or the United States. The exchange must come up with good customer care support so that at any incident of hacking, you should be able to reach the customer care of the exchange and retrieve your account.
Do proper research!
Reputation plays a significant role in determining the legitimacy of a cryptocurrency exchange. Even before signing up for an exchange, an investor should consume a great deal of time to properly analyze the rules and regulations of a cryptocurrency exchange and its security protocols. Checking reviews of existing users regarding security and transactions can help the investor acknowledge the pros and cons of an exchange.
I always prefer the security of any other feature!
If you compromise security in the cryptocurrency space, you will lose all your assets one day or another. The challenging part of every cryptocurrency exchange is to complete the KYC. The more challenging it is to verify the user account on an exchange, the more robust the exchange’s security protocols. In short, the ease of validating a user account demonstrates the legitimacy of an exchange. If it is straightforward to generate and verify the account on a particular exchange, the exchange will likely have some security protocols.
Despite the cryptocurrency exchange, an investor is about to choose, they always store most of the assets in cold storage. You might wonder what cold storage is; cold storage is a cryptocurrency wallet that does not support the internet.
An enticing type of cold storage is a hardware wallet; it is very appealing in terms of security and offers numerous features compared to a hot wallet. Cold storage is famous just because of its security protocols. Moreover, cold storage wallets are incompatible with internet services; they offer a gigantic immunity towards malicious activities.
Attributes that make a cryptocurrency exchange better than the rest is its security and transaction fees. People always try to save a few dollars while processing transactions. Undeniably low transaction fees are an attribute of the profound exchanges, but that does not mean every trading venue offering fewer fees is trustworthy. While looking for low transaction fees, you should also focus on security protocols.
The portion mentioned above describes everything you should know about cryptocurrency exchange.