Things you need to know about crypto exchanges

Introduction to crypto exchanges

Crypto exchanges are online platforms that enable buying and selling of cryptocurrencies. There are numerous types of crypto exchanges, from those that support fiat currencies (such as dollars or euros) to those that only offer crypto-on-crypto transactions. Some of the most famous and largest are Binance, Coinbase, Kraken, Huobi… However, exchange offices carry many risks. Over the years, numerous exchanges have experienced hacks, thefts, scams or bankruptcies that have resulted in the loss of billions of dollars in the value of user cryptocurrencies. Some of the most famous examples are QuadrigaCX, which is 2019. In 2022, it collapsed after the death of its founder, who was reportedly the only one with access to keys with $190 million worth of cryptocurrencies and FTX, which in 2022. In 2004, he filed for bankruptcy after experiencing a major liquidity crisis. These cases show that exchanges are not a safe place to store cryptocurrencies, and that users should put their money in their wallets, where only they themselves have access to money. In this blog, you will learn a few things you need to know about crypto exchanges. We will explain how to protect yourself from possible losses, choose the right exchange and how to properly store your cryptocurrencies on your own wallet. We hope that this blog will be useful and interesting, and that you will enjoy reading and learn something new.

Source: cointelegraph

third-party risk; Is the money not yours?

The first thing you need to know about crypto exchanges is that when you sign up for them, you agree that the money you keep on them is not yours, but belongs to the exchange office. This means that the exchange office can use this money as it pleases, whether it invests, borrows or spends it. It also means that there is a possibility that when you ask for your money, the exchange does not have it on it, because it lost or spent it. This is called a third-party risk and represents one of the biggest risks associated with crypto exchanges . That’s why it’s important not to keep too much money on exchanges, but only as much as you need to trade, and when you’re done trading, you withdraw money on your wallet. Third-party risk is particularly high in the crypto world, as exchanges are not regulated or supervised like traditional financial institutions. This means that they are not obliged to provide their funds, conduct audits, adhere to standards, which still do not exist, security and transparency are also at a low level, and exchangeoffices are still not obliged to compensate users in case of loss of money.

Source: cointelegraph

Frequent hacks

Hacking is one of the biggest problems and risks facing exchanges. Hacking is an unauthorized access or attack on the system or data of an exchange, with the aim of stealing, destroying or manipulating cryptocurrencies or other information. This can lead to huge losses for exchange users and owners, as well as to erode trust and reputation in the crypto industry. Over the years, a number of exchanges have been victims of hacking, which have resulted in the theft of billions of dollars in cryptocurrency value. According to an analysis, since 2012. by 2022 In 2001, at least 48 exchange offices were hacked, and a total of about $2.85 billion were stolen or lost. Only in 2022. In 2001, more than 20 hacks took place in which at least $10 million per attack were stolen. Some of the biggest and most famous are:

  • Gox (2014) – the first and largest exchange to lose about 850,000 bitcoins (about 7% of all bitcoins at the time), which was then worth about $450 million. The hack caused the price of bitcoin to fall and the exchange bankruptcy.
  • Binance (2019) – the largest and most popular exchange that lost about 7,000 bitcoins (about $40 million at the time), after hackers exploited vulnerabilities in security systems and user accounts. The exchange was able to compensate for the loss from its reserves and continue to operate normally, but it could have ended in a complete loss of money for the exchange office, the same as for users.
  • KuCoin (2020) – one of the latest victims of hacking, who lost about $280 million in various cryptocurrencies, after hackers gained access to her private keys. The exchange managed to recover most of the stolen funds by cooperating with other exchange offices and projects.

These hacks affect the price, volatility and perception of cryptocurrencies, as well as trust and security in the crypto industry. Also, they show the need for better regulation, monitoring and standardization of exchangeoffices, in order to ensure their transparency, accountability and protection.

Source: cointelegraph

How to choose the right exchange office

Choosing the right exchange to buy, sell and exchange cryptocurrencies is an important decision that can affect your experience and security in the crypto world. There are many different exchanges that offer different services, functionalities and pairs, so it is necessary to research and compare well before deciding on one. Here are some factors you should consider when choosing an exchange office:

  • Reputation: one of the most important factors when choosing an exchange office, because it shows how reliable, safe and high-quality the exchange office is. Before you register on an exchange office, check what other users say about it on the Internet, especially on forums, social networks and reviews. Also check if the exchange has a physical address, license, certificates or other evidence of legitimacy. Avoid exchanges that have a bad reputation, hack ing history, scams, or other problems.
  • Security: another key factor when choosing an exchange office, because you want to make sure that your data and assets are protected from theft, loss or damage. Check what security measures and technologies the exchange uses, such as HTTPS connection, two-factor authentication, cold wallet storage, encryption, audit, etc. Also check how the exchange resolves any incidents or disputes, and whether it has insurance or guarantee for its users. For example Binance and KuCoin successfully recouped money lost in the hacks.
  • Fees: Fees are the costs that an exchange charges for its services, such as trading, withdrawing or converting cryptocurrencies. Fees may vary depending on the type of transaction, amount, market or payment method. It is important to compare the fees of different exchangeoffices and find the one that offers the best price-quality ratio.
  • Liquidity: a measure of how easy it is to buy or sell a cryptocurrency on an exchange without affecting its price. Liquidity depends on the number and volume of users and transactions on the exchange. Higher liquidity means faster and more favorable trading, while lower liquidity means slower and more expensive trading. Liquidity can be checked by looking at the depth of the market (number of supply and demand) and the price range (the difference between the highest and lowest price) on the exchange.
  • Markets: Markets are pairs of cryptocurrencies that you can trade on an exchange. For example, BTC/USD is a market where you can buy or sell bitcoin for the US dollar. Different exchanges offer different markets, depending on which cryptocurrencies they support and which currencies they accept. It is important to choose an exchange office that offers markets that interest you and that have good liquidity. It is also important to check whether the exchange has restrictions or conditions for trading in certain markets, such as minimum or maximum amounts, identity verification or other procedures.
  • User experience: a measure of how easy and comfortable it is to use an exchange office. This includes design, functionality, speed, customer support and other aspects of the exchange. It is important to choose an exchange that offers you a simple and intuitive interface, a stable and fast platform, customer support and assistance, and additional features and tools that can make your trading easier and better. It is also important to check if the exchange has a mobile app or website that is adapted for different devices and browsers. You can check this by examining users of a particular exchange on reddit or some other place on the Internet.

These are some of the most important factors that you should consider when choosing an exchange office. However, no exchange is perfect and risk-free, so it is always advisable not to keep too much money on the exchange, but to transfer it to your own wallet, which gives you more control and security over your cryptocurrencies.

Source: cointelegraph

Cryptocurrency storage

Cryptocurrency storage is the process of storing and managing cryptocurrencies in a secure and convenient way. For storage, it is necessary to use a wallet, which is a device, application or service that provides access to and control over private keys for cryptocurrencies. Private keys are secret codes that prove ownership and allow cryptocurrencies to be sent and received. A wallet is like your personal cryptocurrency bank account, so it’s important that you choose it and use it carefully. There are many types of cryptocurrency wallets, which differ in security, functionality and availability. Some of the most common types of wallets are:

  • Paper wallet – a wallet consisting of a printed or written private key on paper. The paper wallet is very safe, because it is resistant to hacking and theft, but it is also very impractical, as it requires manually entering the key for each transaction.
  • Hardware wallet – a wallet consisting of a physical device that stores private keys on a secure chip. The hardware wallet is very secure, because it is isolated from the Internet and other devices, and is also very practical, because it can be connected to a computer or mobile phone for quick and easy use.
  • Software wallet – a wallet consisting of an application or program that stores private keys on a computer, mobile phone or website. It is very practical, because it allows easy and fast access and management of cryptocurrencies, but it is also less secure, because it is susceptible to hacking, viruses or data loss.

If you want to learn more about cryptocurrency wallets, you can read our blog special for the topic of wallets, where we will explain in more detail the advantages and disadvantages of different types of wallets, as well as give you tips on how to choose and use the best wallet for your needs. However, no matter which wallet you choose, remember that it is always better to keep your cryptocurrencies on your own wallet than on an exchange, as this will give you more control and security over your funds.

Source: cointelegraph

Conclusion

In this blog, you learned the most important things you need to know about crypto exchanges, platforms where you can buy, sell and exchange cryptocurrencies. Crypto exchanges are an indispensable part of the crypto world, but also very risky, so it is important that you be careful and informed before you start trading. We also gave you tips on how to choose and use the right exchange for your needs, as well as how to save your cryptocurrencies in a safe way, using your own wallet. We hope that this blog was useful and interesting to you, and that you learned something new about exchangeoffices. If you want to learn more about cryptocurrencies, you can follow our blog and visit us on our social networks (Twitter, Instagram), where you are free to ask questions.