Wondering if bitcoin exchanges are safe or not? If your answer is then read on. If you read crypto news often, you will find that often cryptocurrency exchanges are getting hacked. And this is a pretty good reason to be careful with bitcoin exchanges.
As all your bitcoins can get vanished once it is hacked. And your exchange will not be responsible for this. A pretty scary thing, right?
Well, in this article, I will talk about why bitcoin exchanges get hacked. And how can you protect yourself from being affected by it?
So here we go:
Is bitcoin exchange safe? Do you get hacked while trading bitcoin?
There are two main types of crypto exchanges that are available out there. These ones are the centralized and decentralized exchanges. And most of the exchanges that get hacked are the centralized ones. And let me tell you the reasons behind this.
These exchanges have their own funds, and users fund under their control only. And most of them have even the private key of the users. So in case if you are using them, then you do not have full control over your funds. And whenever a hacker attacks the platform, they get easy access to your funds. And as a result, you end up losing all your cryptocurrency.
Also, when they design the system, they use a combination of hot and cold wallets to keep the funds safe. Hot wallets are the ones that are connected to the internet, so if a hacker finds access to the wallet. It could simply end all the available funds immediately from the hot wallet to an address.
For example, one of the famous exchange, Bithumb, was hacked. Because they have kept $30 M in hot wallets, and now they have to refund their users.
However, dealing with hackers is not that hard part. The bitcoin exchanges should apply proper security measures. This would keep more than 90% of the user’s funds in cold wallets. These wallets are disconnected from the internet. So the hackers will not have access to the funds.
How can you protect your funds from hackers?
If you are a crypto trader who has a long term plan, then it is advisable not to use exchange wallets. As they are not so reliable. And you will have to face a lot of trauma if the exchange gets hacked.
For your own safety, it is recommended that you send all your funds to a wallet. It could be anything online wallet or offline wallet like Ledger. This way, you will be able to protect your bitcoins from the hackers. Also, when you would like to sell your coins, you can simply transfer it back to the exchange and sell it off.
So that was the answer to your “is bitcoin exchange safe? Do you get hacked while trading bitcoin question?” I hope this has cleared all your doubts.…