Best Security Practices for Holding Cryptocurrencies on Exchanges

Previously, I was scammed about 1355 USDT because I clicked a phishing link that I shouldn't have. A lesson learned: The Major Security Flaws of Wirex (WirexApp) Exchange

In the world of cryptocurrencies, security is paramount. While the decentralized nature of blockchain offers robust protection against many types of fraud, the exchanges where you buy, sell, and hold your digital assets can be vulnerable to hacks and other security breaches. Here’s a comprehensive guide to ensuring your crypto assets remain secure on exchanges.

Recently, there were two major incidents where users account have been hacked, and the funds were stolen from the Crypto Exchanges. Most crypto exchanges are centralized aka CEX. Thus CEX are like the banks, which may be hacked. Not your keys, not your funds. It might be safer to move your assets to your local wallets, and protected using a hardware wallet e.g. ledger.

HTX exchange requires 3 things for every single withdrawal: SMS, Google 2-FA, and Email verification. Some exchange suspends the withdrawal 24 hours within user's password is changed.

Enable Two-Factor Authentication (2FA)

Two-Factor Authentication (2FA) is an essential security measure that adds an extra layer of protection to your account. Here is how it works:

• Why 2FA?: It requires not only your password but also a second factor, usually a code sent to your phone or generated by an authenticator app.
• Best Practices: Use an authenticator app like Google Authenticator or Authy instead of SMS-based 2FA, as SIM swapping can compromise SMS-based 2FA.

Enable SMS Alerts

SMS alerts can notify you of any suspicious activity on your account:

• Benefits: Immediate notifications for logins, withdrawals, and changes to account settings.
• Security Tip: While SMS alerts are useful for notifications, avoid using SMS for 2FA. Instead, rely on dedicated authenticator apps.

Access the Exchange Website in Incognito Mode

Using incognito or private browsing mode when accessing your exchange account can enhance security:

• Why Incognito Mode?: It prevents the storage of browsing history, cookies, and cached data that could be exploited by malicious software.
• Additional Benefits: Extensions are disabled in incognito mode by default, reducing the risk of malicious extension attacks.

Avoid Using VPNs

While VPNs are generally good for privacy, they can sometimes raise security concerns with exchanges:

• Why Avoid VPNs?: Some exchanges might flag VPN usage as suspicious, leading to account access issues or additional verification steps.
• Security Compromise: VPNs can sometimes route traffic through compromised servers. If using a VPN, ensure it is a reputable provider.

VPN can be a malicious middle-man, which can intercepts everything between you and the Crypto Exchange.

Whitelist IP Addresses

Whitelisting IP addresses adds a robust layer of security:

• How it Works: You specify which IP addresses are allowed to access your account. Any login attempt from an unlisted IP address will be blocked.
• Best Practice: Regularly update your IP whitelist if you have a dynamic IP or use a specific range of IP addresses from trusted networks.

Use Strong, Unique Passwords

Your password is your first line of defense:

• Password Tips: Use a combination of upper and lower case letters, numbers, and special characters. Avoid using common words or easily guessable information.
• Password Manager: Consider using a password manager to generate and store complex passwords.

Monitor Account Activity Regularly

Regular monitoring of your account can help you catch any unauthorized activity early:

• Action Steps: Review your account activity for any unusual transactions or login attempts.
• Notification Settings: Ensure you have notifications enabled for all significant account activities.

Anti-phishing Code

For most exchanges, you can configure and enable an Anti-phishing Code which will be shown in the communication email so that you know if the email is geniue. Treat this Anti-phishing Code as secret that both you and the Crypto Exchange know. It is one of the easiest method that you can take to enhance the security, and reduce the risks of being scammed by the emails.

Keep Your Software Updated

Ensure all your devices and software are up-to-date:

• Why It Matters: Software updates often include security patches for newly discovered vulnerabilities.
• Auto-Updates: Enable automatic updates for your operating system, browser, and any security software you use.

Avoid Public Wi-Fi

Public Wi-Fi networks are notoriously insecure:

• Risk Factors: These networks can be easily intercepted by malicious actors looking to steal sensitive information.
• Solution: Use a secure, private connection whenever accessing your exchange account.

Educate Yourself on Phishing Attacks

Phishing attacks are a common way hackers gain access to accounts:

• Identification: Be wary of emails, messages, or websites that ask for your login credentials.
• Verification: Always double-check URLs and never click on suspicious links. Go directly to the exchange’s website by typing the URL yourself.

Conclusion

Holding cryptocurrencies on exchanges requires a proactive approach to security. By implementing these best practices—such as enabling 2FA, accessing your account in incognito mode, and regularly monitoring account activity—you can significantly reduce the risk of unauthorized access and ensure your digital assets remain safe. Stay informed and vigilant, as the security landscape is always evolving.

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