If you’re thinking of buying and trading Bitcoin, it’s very important to think about how to keep your crypto safe. Especially if you’re looking to trade a lot.
If you simply want to buy bitcoin and hold on to it for the long term, without trading it against other coins, it’s best to keep your keys in a cold wallet.
But if you want to trade actively, you will need to be very selective about what crypto exchange you’ll be using. There are also some steps you can take yourself to ensure buying and trading Bitcoin is done in the safest way.
Here are a few things to look for and think about when choosing an exchange.
Decentralized versus centralized
We can generally distinguish between decentralized and centralized exchanges.
A decentralized exchange (DEX) offers a peer-to-peer trading platform, where traders hold custody over their own funds. Compared to centralized exchanges (CEXs), they are relatively slow. This is because there is an inevitable time delay between when a blockchain transaction is broadcast, and when it is validated. In the absence of oversight, DEXs are not regulated.
At a CEX, the funds in your account are held by the exchange, and therefore, the safety of your crypto is partially dependent on their security systems. Due to how they’re set up, some CEXs can support fast trading and high volumes.
If you do decide to trade on a centralized exchange, here are some things to look for:
Check if the exchange is covered by reputable publications, but also how users speak about it on social media and forums. It’s also useful to see if the exchange has any notable partners or clients
A trustworthy exchange should be very open about its fees, but also about its staff members, and preferably have some type of customer service where people can go to if they have any questions.
If exchanges follow rigorous identity verification procedures, it means they are cognizant of the law. It also means they filter out bad actors who may want to launder money or manipulate the market.
Exchanges will always say they care about security. The safest exchanges will work with multi-signature wallets, hold a large portion of user funds in cold storage, and provide some type of service – for big investors – to have their funds stored in fully insured, regulated custody service providers.
Further steps to protect your crypto
Finally, also make sure that you take the following measures yourself:
- Choose a strong password, and change it regularly.
- Always opt to use Two-Factor Authentication. This will add another layer to your security.
- Avoid trading while using public Wi-Fi or a public PC.
- If you hold a lot of Bitcoin, you can consider keeping some of it in a cold wallet, while you keep the rest on an exchange to trade with.
- Last, but not least, never share your password with anyone.