Last week Altsbit, a centralized crypto exchange based in Italy, announced that it had been breached, and it would be closing down after losing most of the user funds it held, including BTC, ETH, ARRR, and VRSC. Even though a small part of the funds stored in cold wallets was left untouched, the hack effectively ended the life of the exchange, which was only a few months old.
In total, the funds lost included; Bitcoin (BTC): 6,929 lost out of 14,782 held, Ether (ETH): 23,210 lost out of 32,262, Pirate Chain (ARRR): 3,924,082 lost out of 9,619,754, Verus Coin (VRSC): 414,154 lost out of 852,726, and Komodo (KMD): 1,066 lost out of 48,015.
The exchange has promised to reimburse users, however partially.
The hack was claimed by a black hat hacking group LulzSec who, through their Twitter handle, wrote, “We assure that @altsbit didn’t have (sic) proper security to stop Lulz Canon. Many others to follow. Better Stack up the Security – Note to other Exchanges.“
The incident is the latest reminder of why it’s essential for crypto users to take all the necessary measures to safeguard their digital assets.
According to a recent report by CipherTrace, a blockchain forensics firm, crypto-related crimes more than doubled over the past year to $4.52 billion.
Dangers Of Centralized Exchanges
Centralized exchanges pose massive security risks as they are prone to hacks, scams, and other security flaws, as we have seen over the years. As more money comes in from new investors, centralized wallets become large honeypots that are enticing for malicious individuals.
While standard practice dictates that centralized exchanges should store assets needed for trade in “hot wallets” and the rest in “cold wallets,” its impossible for users to know whether the platform they use is enforcing the necessary security measures.
When it comes to information, centralized exchanges are opaque, and it’s hard to find any info on their wallets and how they handle user funds.
Lack of regulatory oversight also doesn’t help as less qualified exchanges can operate at the expense of users.
With this in mind, you may be wondering which is the safest way to protect your digital assets in 2020. Below we are going to take a look at a few ways you can guarantee the security of your crypto assets.
How To Protect Your Cryptocurrencies In 2020
Going back to the Altsbit hack, a victim of the breach claimed even though he lost some of his BTC, it was ok as the actions of the hackers are bound to push everyone to use decentralized exchanges.
Decentralized exchanges operate without a central authority and allow for peer to peer trading of cryptocurrencies. Since users are not required to transfer their crypto assets on the exchange, DEX platforms reduce the risk of theft through hacks or other ways.
These platforms can also prevent price manipulation as a result of wash trading and are more anonymous compared to exchanges that enforce KYC.
With decentralized exchanges considered better alternatives to their centralized counterparts, in 2020, DEX platforms are on the rise.
A good example is Dexive, a platform that provides users with advanced trading tools such as advanced order types and price alerts. It is highly secure and practically immune to hacks that plague centralized platforms.
Liquidity has been a big issue among DEX platforms; however, Dexive offers users access to liquidity from various exchanges in a single place. The platform started its token sale on 11th and will run until the 26th of this month.
If you are to use centralized exchanges, ensure before you open an account on your preferred platform, you have registered a unique email to use for the account and verify it. Also, remember to set a strong password and keep it in a private place.
The next step is to authenticate your account. This can be done by installing the Google authenticator from the playstore. It’s safer than SMS since it’s impossible to be tracked by third parties.
From your account, go to the security settings and activate the “2-factor authentication.” Connect your phone with the account by scanning the QR code provided there.
It’s vital to ensure you turn off the 2FA SMS authentication and account recovery using email as this can lead to an attack through email.
Also, avoiding talking about crypto in public, especially on social media, as this can make you a target. Additionally, it’s vital to split your crypto assets among different wallets as this reduces the damage in case one is breached.
Finally, consider storing your crypto assets on cold wallets. These are wallets that keep your coins offline.
This can be done by downloading an app for a cold wallet on a new, secure USB drive. Then reset the computer to factory settings and disconnect it from the internet. After, load the app for cold wallet and store the coins on the offline PC.
Altsbit serves as a timely reminder of the dangers that come with centralized exchanges. But, as we have seen above, there are a few ways to safeguard your coins, including opting for DEX platforms. However, if you still prefer centralized exchanges, using hardware wallets and following the security tips we offered above should guarantee more security for your digital wealth.
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