How to Start Your Own Bitcoin Exchange – Tips to Secure Your Exchange
Important tips to enhance the security of your bitcoin exchange
With cyber criminals targeting crypto exchange platforms, cyber security is the top most priority of bitcoin exchanges. Given the semi-anonymous status of bitcoin and other cryptocurrencies, hackers are not only able to steal funds but also exchange them for fiat currency without getting noticed. This has led many reputable exchange platforms to invest in new and advanced security measures to offer enhanced protection to their users' funds. bch to paypal
If you are looking to invest in an exchange and are wondering how to start your own bitcoin exchange, gain insight into following tips to build a secure exchange.
Two-factor authentication
To improve the security of individual trading accounts, most exchanges use two-factor authentication (2FA) when their users log into their trading accounts. Two-factor authentication requires users (at the time of signing up to their accounts) to provide their user name and password, along with a confirmation code that is shared with them either via a text message or an automated voice call. Even if someone steals a user's login details, he or she would be unable to access a user's account since the confirmation code would still be required to log in.
Time-locks
An innovative solution to secure bitcoin transactions, especially at the time of withdrawal, is to use time-locks which require two keys and a particular time frame to complete a bitcoin transaction. For example, one key is required to start a transaction and the second key to complete the transaction. If the second key is not used to confirm the transaction, the transaction is reversed, making it almost impossible for hackers to withdraw funds.
Multisig
While comprehending how to start your own bitcoin exchange, understand how multisig can work for your benefit. Multisig, short for multi-signature, requires more than one private key to authorize a bitcoin transaction. Many major exchanges embrace this technology to secure their users' wallets and provide an extra layer of security.
KYC check
Some bitcoin users prefer to trade on exchanges that do not require KYC verification because these users want to trade anonymously. However, the truth is that bitcoin exchanges that require identity checks offer a more secure platform to users for trading. If every individual involved in trading passes an exchange's KYC verification process, the risk of fraud is greatly reduced as people indulged in illegitimate trading can be easily recognized.
Cold storage
Cold storage can also be used to provide an extra layer of security while safeguarding users' funds. Cold storage refers to offline storage of bitcoins in a cold wallet. It is useful for those who trade bitcoins worth a large amount. As the coins are not stored online, it becomes nearly impossible for hackers to access users' funds.
Insurance policies
Another way for an exchange to enhance its security is by purchasing an insurance policy that covers cyber attack and any loss from technical malfunctions. For example, local exchanges in Japan can buy dedicated bitcoin exchange insurance that covers against losses because of operational issues, cyber theft and embezzlement by employees.
With the increase in bitcoin trading volumes and exchanges handling more number of transactions daily, cyber security has become imperative. Many major exchanges are adopting advanced technologies to enhance their security and provide their users with a platform that allows secure, fast and uninterrupted trading.
While you seek advice on how to create your own bitcoin exchange, make sure to focus on these tips to build a highly-secure exchange platform. This will help build potential investors' interest in your exchange. In addition, emphasize on making your platform user-friendly so it is easy-to-understand by your target audience.