The massive hype about cryptocurrency is evident by its growth. Investing in digital currencies or owning exchanges comes with real risks. The technological structure of these exchanges is uncertain. The threats have nothing to do with blockchain. Instead, the risks are concealed in the exchange integration itself. The future of the security operation will show if digital currency will work out the pressure induced by exchange hacks, corruption, and other general concerns. Here are the harsh realities behind the security of the crypto markets.
The crypto stored in the cold wallets can still be stolen
There is a saying that a wise investor should store their crypto assets in a cold wallet; unfortunately, this is not entirely true. Within an exchange, all storages seem to exist in hot wallets. Hackers have shown that cold wallets can get hacked too. Any virtual activity or application layer is a possible target. Still, bitcoin transactions such as withdrawals, deposits take place online. Once virtual exchanges are vulnerable to attacks, a cold wallet can suddenly warm up. Any transaction that will happen must be integrated with proper application security measures to be secured.
Your exchange may not be precisely located where you thought
Security relies on the specific physical exchange location. There are no international exchange regulations, and there is even less assurance for crypto holders, just like what happened at MTGOX. The bottom line here is that the exact location of the exchange might be unknown, which still raises security concerns.
The location also helps us identify non-cyber crime concerns such as economic contexts, taxes, banking regulations, and consumer rights. The whole process from settling accounts to authenticating varies based on the exchange location. That's why the location is a huge concern. If you are currently using distinguished platforms such as Azure or Amazon Web Services, those are solid-tech. In contrast, lower established ones may be blocked from accessing your crypto assets. The exact location of servers should be stated in the exchange in terms of laws and service. Make sure to confirm the actual location of the exchange as part of your trading effort.
Double аuthentication does not mean double security
Authentication checks can't prevent all thefts. Still, vulnerabilities can happen on the client's end and on the server's end applications. Authentication checks may not stop theft. Vulnerabilities can exist from the client-side as well as server-side applications. On the client's part, a hacker can access XXS to modify the owner's address through HTML code and take off funds in that account and transfer it to an illicit account. While on the server's end, remote code execution (RCE) attackers can effortlessly dismiss any two-factor checks totally by executing their transactions with your client's ID. While two-factor authentication (2FA) is a necessary measure to prevent account takeover, it does not alternate other standard security measures both in the client and server end.
Distributed exchanges are not 100% protected
Distributed exchanges are not completely secure. Even with the most secure cryptocurrency transactions or wallets, the web interface that you use possesses risk. Whether an exchange is centralized or decentralized, the exchange is still vulnerable; that is because the forepart activity, which refers to the client using their web interface and its centralization. If you are using the internet to connect, there is no authentic decentralization that happens. So, there is still a centralized server that is susceptible to attack. Therefore, it is a must to search for exchanges that take in whitepapers that also incorporate the security of the front-end application server exchange.
Ponder on tech and infrastructure
It is essential to watch for the technology and partnership pages on your exchange website or platform to comprehend the concept and application of cloud or API infrastructure. You must consider it as a huge red flag if they have none of these pages. Vulnerabilities can be exploited in the wallet that traders use since people can alter where the crypto asset goes or the amount they are transferring. Everything that happens in the exchange is crucial. So, the network and cloud providers that are in charge are as important as the security.
Rounding off
Cryptocurrency operations go through sensitive front-end servers. It would be best if you assured that the exchange you use has the appropriate security application in place.
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