One of the foundational benefits of blockchain technology is that people can control their wealth, but that also means that they must safeguard it on their own.
Protecting Crypto assets is difficult and the wealthy simply utilize custody services to safeguard their cryptocurrencies; meanwhile, the average Joe has to work hard to safeguard his/her keys. However, there is one Crypto engagement that involves relying on a third party to safeguard one’s funds: trading.
A person doesn’t need to be a day-trader to have to use an exchange. Exchanges are the gate-way to Crypto; they provide the means to enter the market, move on to new investments, and to liquidate assets. Nearly everyone in this market has used an exchange at some point in his/her life.
A Focus on Exchange Security
A newly launched exchange, ProBit, has taken great efforts to ensure that its users’ funds are given an unparalleled amount of security.
This is good news for the Crypto market because, as it stands, most exchanges are either indifferent to user funds or simply do not disclose the means with which they are handling user funds. A research by the largest cryptocurrency derivatives platform, BITMEX, shows that less than a third of cryptocurrency exchanges secure the vast portion of user funds in cold wallets.
Cold wallets are a costly operation for exchanges and require a painstaking amount of effort to maintain. Thus, exchanges forego this security means even though it is the most important and effective way to secure users’ funds. This does not justify exchanges habit of foregoing the use of cold wallets as these are the most effective means to keep users’ funds away from hackers.
Unlike the norm, ProBit is taking the effort to place at least 95% of user funds in cold wallet.
This will be a costly measure for this new exchange and will make break-even more difficult given that ProBit charges the lowest fees in the market to PROB users. Market-makers paying fees with PROB will have to pay a minimal fee of 0.025%—that’s $5 per $10,000. This shows that the exchange is taking the risk of valuing user security even when offering minimal fees in the hope that the community will recognize these community-centric efforts and will be a part of the platform in order to voice the support for lower fees and greater security.
BITMEX’s report managed to shed light on more than just the usage of cold wallets. Unsurprisingly, 89% of cryptocurrency exchanges have been hacked. This is due to lax safety precautions. The lack of cold wallet usage simply meant that large sums of user funds were easily compromised.
However, proper security measures need to be undertaken. ProBit recognizes that an exchange’s security measures should be so robust that cold wallets are just a final measure of defense.
ProBit sits upon one of the most—if not the most—powerful exchange engines in the market, capable of handling over 1.5 million orders per second. This ensures that the system never weakens.
However, ProBit has not sacrificed security for the sake of operational prowess. It will utilize FIDO U2F hardware security key to thwart hackers. An industry leader, Yubico, explains that FIDO allows, “users to securely access any number of online services with one single security key instantly and with no drivers or client software needed. FIDO is the latest generation of the U2F protocol.”
On a closing note, it’s important to mention that while an exchange must handle the security of the funds allocated to it, users must handle the security of their account. ProBit takes all the measures to assist users in their efforts to secure the account and they will have to bind a two-factor authentication to the account. This means that simply having an account’s password won’t be enough to access it.
Regardless, you must always take appropriate caution in keeping all your accounts safe; be sure to safeguard all account passwords and habitually update them to retain utmost security on your end.
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