In the past year, many best crypto exchanges have emerged to offer a variety of cryptocurrencies. They are more accessible than ever before with mobile apps and responsive websites. However, this accessibility has its downside: security risks for users. This article will discuss how cryptocurrency exchanges work and the potential dangers they pose to your funds.
Cryptocurrency Exchange Statistics 2020
As of February 2018, the market cap for all cryptocurrencies is $330 billion.
In 2017 alone, over 100 cryptocurrency exchanges opened their doors to investors with new ones launching monthly. These include big brands like Coinbase and Binance as well as smaller upstarts in different parts of the world such as Kenya’s BitPesa and China-based BTCC (recently shut down amid pressure from Chinese regulators). It also includes some companies that are atypical crypto exchanges including social media platform Facebook which launched a service allowing its users to send money through Messenger.
The number one mistake rookie traders make is trading on an exchange without any prior knowledge or experience. This causes them to panic when they encounter difficult funds – something that has become prevalent in the past month.
What Security Risks on Crypto Exchange for Users?
The most common security risk that users face is the phishing scam. Since all transactions on a crypto exchange are run through their login accounts, hackers will use social engineering to get around your email and password protections by sending you emails impersonating an official website or asking you to click a link in order to log into your account. Once they have access, they can withdraw funds from your wallet before you notice what has happened.
Sometimes exchanges don’t follow best practices when it comes to storing digital assets offline in cold storage where there isn’t enough decentralization, so if one person loses his key then none of the other keys work anymore either. This means that you might lose all of your money if you happen to have the only key.
In some cases, exchanges can also get hacked on their end where hackers use a technique called social engineering (similar to phishing) and convince an employee with access privileges into sending them cryptocurrency. This has happened most famously with MtGox but there are many other examples as well like CoinSecure losing $300k worth of bitcoin in April 2018.
You should always be careful when clicking links that take you away from known websites or ask for private information so make sure they’re legitimate before giving up personal details!