Crypto Exchange Platform | Strengthening Security Measures

Published : Jun 30, 2021

Crypto Exchange Security

  • According to the ICO Rating study, just 46% of crypto exchange platforms satisfy the required security standards. On the other hand, the remaining 54 percent, which had inadequate security measures, exposed hundreds of investors and dealers. There are 100 exchanges in the same category, and they all have a 24-hour volume of above $1 million.

    This article will take you through the different security concerns that must be taken during cryptocurrency exchange development. We'll also look at the recommended practices to follow to guarantee that your crypto exchange is as secure as possible.

    Security Concerns | Crypto Exchange Platform 

    Phishing vulnerability 

    Even with the finest technical precautions, protecting crypto exchanges from phishing attempts is tough. As a result, make sure your crypto exchange is phishing-proof.

    Employee login credentials are not well protected

    Employees at cryptocurrency exchanges frequently use weak passwords or keep their credentials in insecure ways. As a result, thieves have easy access to login information. This is why hackers frequently try to get access to employees' personal computers first.

    This raises the issue of corporate data security and workers' capacity to take private and sensitive information home with them. As a result, businesses must guarantee that workers' credentials for software programs installed not just on company computers but also on their laptops are kept safe and secure.

    Also, Read | The Rise of Crypto Derivatives Exchange Development

    Protections for hot wallets aren't present

    To safeguard hot wallets, several crypto exchanges utilize single private keys. If an unauthorized individual has access to the key, they will be able to access the hot wallet that the key refers to. Using multi-signature private keys, cryptocurrency trading platforms may easily avoid such assaults.

    Adaptability in transactions

    According to proponents of Blockchain technology, these transactions are extremely safe since they are stored on an unchangeable record. However, it should be emphasized that each transaction includes a signature that can be altered before the transaction is closed.

    Now that we have a better understanding of the different security issues that may occur in any crypto exchange, let's have a look at some key pointers to guarantee that your crypto exchange is secure!

    Also, Read | Building Blocks to Develop a Robust Cryptocurrency Exchange

    How to Ensure the Security of your Crypto Exchange Platform

    Create a safe environment

    It's critical to give your database, server-side, and client-side technologies the attention they deserve. SQL injections are already common, and they continue to rumble across the internet and blockchain worlds. Malicious Java snippets provide a similar threat. Third-party programs are the only way to keep all of this in check.

    An impostor posing as a customer injecting harmful malware into your crypto exchange's environment is the last thing you want. To avoid this, utilize fewer third parties so that fewer third parties can input data that could jeopardize the crypto exchange website's security.

    In all honesty, eliminating DDoS assaults, XSS attacks, and SQL injections is nearly difficult, but you can still build your exchange environment to prioritize security above cost. Because, in the end, your platform will be dealing with third-party funds as a bitcoin exchange. Any negligence in this respect can lead to grave consequences, both financial and legal.

    Also, Read | Compact Insights into Decentralized P2P Exchange Development

    Customers should be educated

    It is critical for crypto exchange platforms to go above and beyond in informing investors and clients. This may be accomplished by publishing blogs on your website, utilizing social media platforms, delivering instructional newsletters or whitepapers on security issues, and more!

    Make sure everything is covered

    The purpose of the faults is for developers to discover and fix them, not for hackers to get access through the front door. Poor error handling can cause a slew of problems by exposing a lot more data about the exchange's fundamental functionality.

    You must avoid stack traces and data dumps, and you must have the appropriate error handling system in place to do so. You could be unwittingly paving the road for hackers to get access to your environment and discover possible weaknesses if you don't do so!

    So, while hackers puzzle about how to get into your ecosystem, you should concentrate on effective error handling procedures to avoid revealing sensitive data, like source codes, directories, or files, to anybody other than authorized personnel.

    Also, Read | Secure and Efficient Crypto Exchange Development like Binance

    Don't forget about 2FA

    Payment Service Directive 2 (PDA2 2) requires banks to use two-factor authentication (2FA) since it adds an extra layer of protection. This adds an extra layer of protection against hackers. A similar safeguard may be put in place for crypto exchanges to prevent fraudulent transactions and improve security.

    Install an SSL certificate

    SSL certificates, or Secure Sockets Layer certificates, may go a long way toward winning your consumers' confidence. An SSL certificate connotes that the user data remains encrypted and safe, and the site is entirely secure.

    Your consumers are becoming more aware of cybersecurity and related dangers all the time. As a result, having the green padlock appear in the URL bar of your exchange will assist to establish confidence. As a result, obtain an SSL certificate or an EV SSL certificate for your bitcoin exchange as soon as possible.

    Consider the concept of cold storage

    Cryptocurrencies kept in online hot storage are frequently targets of cyber-attacks. Another alternative is to keep them in cold storage, which consists of hardware wallets like Trezor. The expense is a disadvantage, but if you have the financial means to do so, you should invest in a cold storage wallet!

    Also, Read | A Guide to Understanding Hybrid Crypto Exchange Model

    Make a plan for your default security method

    Even before Blockchain, there were always cyber-attacks taking place and failing – occurring due to hackers' ingenuity, failing because of the lack of sufficient default security systems in place.

    As soon as a danger occurs, make sure you have default security software in place that can take control of your environment. Salting and hashing are other options, as they make it harder for attackers to access the data even if they manage to take it.

    Don't forget about KYC... It is necessary

    Because it is the last item on our checklist, don't dismiss it. This is just as crucial as the remaining points, if not more so, yet many exchange owners overlook it. KYC, or Know Your Customer, is a set of rules that crypto exchanges all around the world must follow.

    Whether or not your crypto exchange is subject to statutory KYC laws, it is still a good idea to implement KYC, especially because hackers are increasingly leveraging cryptocurrency to spread malware like Ransomware.

    Also, Read | Decentralized Crypto Exchange Platform Development

    To sum it up

    While developing an exchange application, security considerations are critical. With so much to worry about, it's natural that security takes second place. We guided you through different security concerns as well as actions you may take in this post so that the subject of security does not go unnoticed!

    Is there anything in this article that we've overlooked? Please notify us.

    Have a blockchain project that you need assistance with? Connect with our crypto exchange development experts at Oodles.

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