Operating a cryptocurrency exchange is no easy task. Your exchange needs to keep up not only with the daily fluctuations of crypto tokens but also with the daily developments in the world of cybersecurity because this space is continuously on the radar of cybercriminals. It became even more evident with the recent Twitter hack involving Bitcoin that hackers are chasing the easy money in this space more than they’re chasing it in any other industry.
Therefore, it is of utmost importance for every cryptocurrency exchange to ensure that they have the necessary safeguards to prevent a cyberattack on their infrastructure and their user accounts. And in this article, we are going to discuss the same thing. We will tell you about seven steps that you can take to keep your cryptocurrency exchange secure. Let us begin!
#1. Enforce usage of strong passwords
Security starts with a password. Therefore, it’s essential to work on this first step when you want to ensure our crypto exchange’s security. Enforce the usage of strong passwords not just in your organization but also across all the user accounts. A strong password includes at least one letter in uppercase, one in lowercase, a number and a symbol. It should also be at least eight characters long. Such a password may not be easy to remember, but it is the need of the hour to ensure the security of user accounts and data on your cryptocurrency exchange.
#2. Use 2FA
Two-factor authentication, or 2FA, adds another layer of security to the accounts of your users. Almost all major cryptocurrency exchanges allow their users to set up 2FA through Google Authenticator or some other method of their choice (i.e., SMS based verification, code-based verification, etc.) to ensure the security of their accounts. By doing that, your users will have control over who can access their account even if their login credentials have been compromised, which will give them peace of mind. You can also make 2FA mandatory before the withdrawal of funds from user accounts, or for movement of cryptocurrencies to another exchange.
Also Read: Two – Factor Authentication on Linux Machine
#3. Utilize the power of cold storage
If there is one thing in common between the perishables food industry and the crypto industry, it is the importance of cold storage. Jokes apart, you need cold storage wallets to ensure the security of cryptocurrencies stored in your customers’ exchange. Cold storage in crypto means storing cryptocurrency tokens in a device that is not connected to the internet, so it cannot be hacked remotely. Once your customers have loaded their user accounts by sending their tokens to your hot wallet (the exchange wallet that can receive tokens through the internet), you should move them to the cold storage on regular intervals to ensure that most of your tokens remain secured in case of an exchange hack.
#4. Use SSL certificate
An SSL certificate is the most basic requirement for the security of any website in today’s time. Your cryptocurrency exchange is no different – you must protect it from phishing and packet sniffing attacks by installing a reliable SSL certificate. For example, EV SSL certificate is an ideal choice to protect against phishing attacks. In case you do not know about them, phishing and packet sniffing are two of the most common types of cyberattacks that can compromise your whole site and user data. Phishing is done by creating a cloned version of your site and directing users to that cloned site through emails and other marketing channels. In contrast, packet sniffing is done by capturing the data packets being transmitted between you and your users. SSL certificate security eliminates the possibility of both by adding a unique identity to your website URL in the form of a green padlock and encrypting data packets before transit.
#5. Comply with PCI DSS and other safety regulations
There is a good chance that you might have heard about PCI DSS or Payment Cards Industry Data Security Standards. You may also be fully compliant with them because without complying with them one cannot accept online payments (which is a crucial part of cryptocurrency exchange functionality). However, if you are running a crypto-to-crypto exchange or there is some other kind of reason due to which you have not complied with these regulations, do comply with them as soon as possible. You should also comply with Europe’s General Data Protection Regulation (GDPR) and other similar data security rules to ensure that you are not violating any data security rules.
#6. Keep evaluating your systems regularly
It is important to keep in mind that security systems and procedures keep getting outdated as time goes. Therefore, it is important to keep an eye on them. You should evaluate your security systems from time to time and ensure that none of them have become outdated in comparison to the security risks that are evolving with time. This involves:
- Updating your antivirus and firewall programs
- Updating all parts of your server software
- Checking that real-time alerts are working properly
- Checking if the procedures put in place are being followed diligently
- Scanning your exchange for potential loopholes through a site inspection software
All these tasks should be done on a regular (i.e., weekly, bi-weekly) basis to ensure your cryptocurrency exchange’s security.
#7. Maintain backups
Finally, keep a backup of your data and ensure that your backup is as up to date as possible by backing up on regular intervals. By maintaining up to date backup of user data and your internal data you will be able to migrate swiftly to another server in case something goes wrong with your existing server, thus minimizing your losses. You can automate your backups through various tools that are available in the market.
Conclusion
Finally, keep in mind that there is no way to guarantee that you will not be hacked at some point. Even some of the biggest cryptocurrency exchanges like Binance, Bithumb, etc. have been hacked when they were at the peak of success. However, you can certainly avoid being hacked easily and minimize your losses in those rare circumstances when things do not go according to you, which is what these steps outlined above can help you with.
So, implement these steps and bolster the security of your cryptocurrency exchange today. Also, if you’ve any other tips that can be used to improve the security of crypto exchanges, share them in the comments.
Also read: Coinnext – Reliable Cryptocurrency Exchange
