For people who will invest in cryptocurrencies for the first time, the most important issue is security measures. The most demanded feature in a Bitcoin Exchange is security. As you know, cryptocurrencies are assets that are produced electronically and traded in the cyber environment. Of course, this cyber environment causes cryptocurrencies to be targeted by hackers.
At this point, security measures and security budget of crypto exchanges are very important. The better the security measures and budget of the stock market, the less likely you are to encounter hacking problems.
The way your data is stored is another important issue. From April 2021, exchanges in many countries are now required to collect user credentials. Keeping your credentials safe from hackers is just as important as the security of your investments.
When choosing an exchange, make sure it has the following features.
- Make sure that the web address of the exchange starts with HTTPS.
- Use Bitcoin exchanges that whitelist your IP address or withdrawal wallet addresses.
- Prefer exchanges that store user wallets offline in “cold storage”.
- Preferably prioritize exchanges in the country you are in.
- Prefer exchanges that have insurance to reimburse you in case they lose your money.
A crypto exchange cannot guarantee that it will not be hacked. In history, there are sites that pay the damage of their users and maintain their credibility even though they were hacked. To question the reliability of a cryptocurrency exchange, you should consider these 3 main criteria: trading volume, history, advertising strategy.
1. Trading Volume
It is a known fact that exchanges with higher trading volume have the budgets to provide higher security measures. So what does trading volume mean? The trading volume is simply; It is the total amount of money exchanged between buyers and sellers in 24 hours.
High transaction volume provides other advantages. For example, in an emergency, you may have to sell your cryptocurrencies on a low-volume exchange at much lower prices than their value. Or when you want to buy right away, you may need to buy more than it’s worth.
Because in exchanges with low trading volume, the price difference between the person who sells the cheapest and the person who gives the most expensive purchase order will be higher than on the stock markets with high trading volume.
All the platforms we have listed here are exchanges with two-factor authentication and many other security measures to keep your money safe. Their websites and mobile applications are subject to regular checks against attacks by hackers.
You can check what feedback people are giving about these Bitcoin exchanges from social media posts or platforms like Trustpilot.
2. History of Secure Crypto Exchanges
Check the history of cryptocurrency exchanges. How long has it been in operation? Older Bitcoin exchanges generally have a much cleaner history, with exceptions like “Mt Gox”.
Cryptocurrency exchanges, which have been serving with confidence for 5 years, have much higher security measures and supervision than new exchanges.
3. Advertising Strategy: Bonuses and Profit guarantee
Be careful about the bonus offers of crypto trading sites. Some newly launched exchanges have large marketing budgets and some even guarantee profits. If something sounds too good to be true, maybe it isn’t.
In addition, some fake Bitcoin Exchanges try to lure potential victims with the promise of Bitcoin to be given as a bonus to the wallet if they become a member. These fake exchanges, which reach a large number of people via e-mail, defrauded thousands of people.
Now that you know what determines the reliability of a cryptocurrency exchange, you may want to take a look at our article about strategies for making money from the cryptocurrency market: This is How Make Money From Cryptocurrency (2022)