TL; DR
It is wise for crypto investors to keep their cryptocurrencies on exchanges and some in digital wallets.
Gate.io is one of the most secure cryptocurrency exchanges to store digital assets.
It is safer to store digital assets in cold wallets than hot wallets.
Introduction
One main advantage of blockchain is that it is very difficult for people to hack and manipulate it. Most of the threats that digital asset users encounter like hacking emanate from the locations where we manage them such as computers and smartphones.
Hackers often compromise the bridges we use to connect with the blockchain. However, there are several measures we can apply to reduce incidents of malicious exploits of digital assets like Bitcoin and Ether (ETH). In this article, we discuss how we can protect our digital assets such as cryptocurrencies and NFTs.
How to Stay Safe on Cryptocurrency Exchanges?
Most people who trade digital assets such as cryptocurrencies and NFTs often use crypto exchanges to buy, hold and trade them. However, when using exchanges you should be safety conscious to prevent hacking and other fraudulent activities, including phishing.
It is important to note that keeping cryptocurrencies on exchanges may be safer than storing them in hot wallets and cold wallets. However, one should use secure exchanges such as Gate.io, Coinbase and Binance which have very few cases of malicious exploitation. In fact, Gate.io exchange is known for its high security measures.
Secure crypto exchanges are more reliable than digital wallets for several reasons. First, people who use cold wallets may lose them at any time since they are movable gadgets. Once someone loses a cold wallet he/she will never recover the digital assets stored there.
Read also: The Difference Between Hot Wallet and Cold Wallet
Similarly, one may also lose mnemonics and private keys. People often use their mnemonics, also called mnemonic recovery phrases or seed words, to access digital assets that are in a crypto wallet. However, when you use a crypto exchange there is no danger of losing mnemonics or private keys.
With exchanges, if you lose your important details like passwords you can get assistance from the support team. For renowned cryptocurrency exchanges like Gate.io the chance of losing your cryptocurrencies is very slim since there are various security measures in place to prevent hacking, for example.
How Cryptocurrency Exchanges Enhance their Security
As hinted earlier, established cryptocurrency exchanges have high security standards. They use several layers of protection. For example, their systems may use SMS verification, email verification, 2-fa, account passwords and withdrawal passwords. It is often difficult for a bad actor to breach all these security measures.
Read also: Keep Your Assets Safe with the Gate Web3 Wallet
Anti-money laundering and know-your customer (KYC): An exchange that implements know-your-customer reduces risks from exchange users. This is because it verifies the suitability of the users. The exchanges may employ various methods which include automated solutions where identity verification is done through computers and smartphones. In addition, they can use human beings to make the necessary cross-checks.
Multiple authentication: Most exchanges also use strict authentication methods. These authentication measures reduce chances of illegal access to individual accounts. For instance, an exchange may use Google authentication, email code and passwords. It becomes impossible for bad actors to guess all these requirements to breach someone’s account.
Use strong passwords: Another good practice is for exchanges to request strong passwords from their customers. A strong password should have at least eight characters that comprise special characters, lower cases, capital letters and numbers. Such a combination of characters makes it difficult for hackers to crack it.
In addition to strong passwords, the exchanges should introduce account locking systems for user who exceed a certain number of failed login attempts. Employing captcha also helps the exchange to differentiate between malicious _script_s and human beings.
Session handling: Another great practice for exchanges is to make sure that sessions expire within a given period such as 5 minutes. When a session expires the user should login again with his/her password and 2 factor authenticator. If there are no time limits attackers may take over sessions without implementing the required security measures.
Wallet security: Cryptocurrency exchanges should store the customers’ digital assets in secure digital wallets. If they store them in inappropriate wallets that affect the exchange’s liquidity and reputation. Worse still, the exchange may lose the customers’ digital assets.
Usually, a crypto exchange should store the excess cryptocurrencies in cold wallets. It should also ensure that the people responsible for transferring digital assets between cold and hot wallets are safety conscious. In most cases, the task of moving digital wallets between wallets is done by two or more people and entails the use of multisig.
TLS Security: Any cryptocurrency exchange should employ basic security measures. For example, it should use encrypted messages and strong ciphers when communicating. This prevents communication interception through man in the middle attacks. Thus, exchanges should always use the relevant TLS configurations.
Deposits and Withdrawals: The exchanges should be extra careful when handling deposits and withdrawals. As an example, they should consider established safety measures like proof of transaction finality. For instance, a transaction is considered successful after the expiration of a certain period. Deposits should be booked after getting confirmations.
FIAT Payment Integration: The fiat payment integrations that exchange use should be secure with no risks in crypto. It should be a must for an exchange to have a reliable endpoint to confirm various transactions whether deposits or transfers. Also, there should be no room for modification of transaction details. This is because if the endpoints are not secure attackers may alter transaction details and steal funds.
Read also: How to Protect Your Assets with Security Devices?
Quick Currency Operations and Transfers: Transfers of cryptocurrencies in exchanges should be very quick to avoid large fluctuations in price during the process. However, the systems should maintain high security. For example, incorrect rounding of decimal numbers may lead to losses.
Measures to Maintain High Security of a Crypto Wallet Even if you can use exchanges to store your cryptocurrencies there are times you should store digital assets in your wallets. Therefore, it is important to become vigilant at all times when using digital wallets.
Using Cold wallets: It is best to store your cryptocurrencies in cold wallets which spend most of the time offline. You will only connect them to the internet when you want to make transactions.
Hardware wallets, which are physical devices to store your digital assets, are very secure. However, if you lose your device you will lose all your assets.
Read also: What can I do to make my Gate.io account more secure?
Multi-signature Wallets: With Multi-signature wallets, you need at least two private keys to make transactions. If you do not have the required number of private keys you cannot transfer cryptocurrencies. As a result, if an attacker gets hold of only one of the keys he/she will not be able to steal your funds.
Keep Your Private Keys Safely: Your wallet’s private key is the gateway to your digital assets. If you lose it you will never get your cryptocurrencies no matter their quantities. On the other hand, if an attacker gets hold of your private key he/she will steal your digital assets.
Therefore, you need to back up your private keys and write your mnemonic phrase down. And ensure to keep a paper backup of your seed phrases.
Use Multiple Crypto Wallets: It is also important to store crypto in different wallets. You increase the security of your digital assets by diversifying your crypto holdings across several wallets. This means that if an attacker accesses one of your wallets you save crypto that exists in the other wallets.
Avoid Using Public Wi-Fi: It is best to avoid using public Wi-Fi when you are interacting with your digital wallets. Usually, hackers target public Wi-Fi located in public spaces, cafes and airports, among others. Also, such networks often lack security protocols and encryption.
What’s Better Crypto Exchanges and Crypto Wallet for Saving Cryptocurrency?
We have already discussed the measures you can take to keep crypto safely when using digital wallets. Also, we have looked at how crypto exchanges make their platforms secure.
From our analysis it is clear that it is safer to keep crypto on exchanges than digital wallets. Nonetheless, you need to choose a secure crypto exchange to store your crypto. With exchanges there are no risks in crypto related to the loss of hard wallets, private keys and seed phrases.
However, cold wallets often experience fewer hacking incidents than crypto exchanges and hot wallets. At the same time, one should store crypto in different wallets and exchanges to minimize loss in case of attacks. Gate.io is one of the best exchanges to trade crypto.
Conclusion
Cryptocurrency holders and investors can store their digital assets on crypto exchanges or wallets. It is best to store cryptocurrencies in cold rather than hot wallets. Nevertheless, many investors prefer to keep their crypto on exchanges for greater security. Gate.io is one crypto exchange known for its high security standards.
FAQs about Crypto Storage
What is the safest way to keep crypto?
The safest way to keep cryptocurrency is to hold them on a secure crypto exchange. Gate.io is one of the most secure cryptocurrency exchanges to store your cryptocurrencies. However, hardware wallets like Trezor and Ledger also offer security for digital assets.
How can crypto be safe?
People should store cryptocurrencies on exchanges as there are minimum risks. Nevertheless, individuals and institutions can also keep their digital assets in hardware wallets.
How do you stay safe trading cryptocurrency?
When trading cryptocurrency you have to implement high security measures like multiple authentication and strong passwords. You should avoid using public Wi-Fi and diversify the storage of the crypto assets.
How do you avoid risk in crypto?
When trading cryptocurrencies you should use private Wi-Fi, multiple authentication, and diversify their storage. It is also important for you to use strong passwords and backup your private keys and seed phrases.
Is Gate.io a safe crypto exchange?
Gate.io, ranked number 7 by Coingecko, is one of the safest crypto exchanges storing and trading cryptocurrencies. It uses SMS verification, 2FA, account password and email verification which secure any account on the platform.