When researching digital assets, investors sometimes start by selecting a cryptocurrency exchange. While there are numerous ways to swap cryptocurrencies, centralized exchanges offer a very simple method of converting money into coins and tokens.
There are numerous exchanges to pick from, some with a more established history than others. Investors can compare exchanges by examining their costs, cryptocurrency variety, advanced trading features, and customer support. Security and transparency are among the most important factors for investors and traders when choosing a proper crypto exchange.
Security is of Utmost Importance
Crypto markets are rife with hackers who seek to take advantage of exchanges and steal your money. Due to the amount of money they hold, exchanges are a common target for hackers. Although the scam attempts seldom succeed, it is recommended that traders choose an exchange that has a strong security system.
The best crypto exchanges should always prioritize security. It’s at the core of user experience from which everything else stems from. The majority of crypto exchanges have effective security measures. For instance, the use of two-factor authentication (2FA) for user-level security is rather common.
Besides the usual security measures, the safest crypto exchanges need to go further to keep their users’ crypto safe. Here we summarize three factors that you need to consider before choosing the most reliable crypto exchange:
- Wallet: As you may know, crypto wallets are usually divided into hot and cold wallets. Some currency must be kept by exchanges in hot storage, which refers to currency that is available online. But it would be better that an exchange maintains the majority of its assets in cold storage for security reasons. “Cold” implies it’s offline, frequently air-gapped, and difficult to physically access.
- System: On high-secure trading platforms, several firewalls are used to divide different zones for various trading objectives. Restriction zones are also applied to avoid suspicious visits. Additionally, best crypto exchanges should also improve the security of trading engines such as the risk check and disaster recovery system.
- User Data: Besides the 2FA feature that mentioned above, a trustworthy crypto exchange should take more measures to ensure its customers’ data is 100% protected. For example, to maintain account security, Phemex uses double-entry bookkeeping at the bank level. To avoid record tampering, Phemex executes a matching accounting action in two or more accounts each time a user performs a funding operation.
Transparency
Transparency and fairness were the guiding ideals of the blockchain industry. When choosing which website to trade on, users should keep an eye out for an exchange’s transparency. The exchange should function in a way that makes it simple for its users and other stakeholders to see how the cryptocurrencies are handled and secured.
Phemex must be regarded as one of the most transparent cryptocurrency trading platforms among CEXes, if not the most. As the catchphrase in the crypto world says, “Don’t trust, verify”, Phemex’s Proof-of-Reserve mechanism enables all users to confirm that their assets are accounted for without the need to rely on a third-party auditor. Phemex cryptocurrency exchange is also one of few that has made a portion of its cold wallet addresses public, thereby achieving Proof of Solvency. Anyone can check the overall liabilities of the platform and contrast them with the assets’ values in the cold wallet addresses.
Moreover, a clear communication channel between the exchange and its customers should also be taken into account. As one of the most reliable crypto exchanges, Phemex never hesitates to the latest platform news as soon as possible, even when sometimes the updates might be negative. Our customer service also runs 24/7 to provide timely support.
Conclusion: Why is security and transparency so important for crypto platforms
Protecting users is the most important goal for major platforms, and they have developed increasingly sophisticated security mechanisms as the blockchain industry grows. When someone first steps into the crypto world, their primary consideration should be how to keep their crypto safe. As a user, it’s strongly recommended to be able to verify by yourself. That’s why transparency is also a key factor when choosing a crypto platform.
As a trading platform that always puts emphasis on security and transparency, Phemex has implemented various mechanisms to protect user funds, all of which can always be examined by the users themselves.