Security Indicators Of BTC Brokers:
If you are looking for the most secure BTC trading platform, you have come to the right place.
On this page we examine for you which factors make a cryptocurrency trading platform as secure as possible. Then we will show you which margin trading platforms this applies to and which can therefore be considered the most secure.
Security Indicators Of Crypto Brokers
For traders, the professionalism of a broker is one of the most important factors on which to base their choice of broker. It is particularly important to know what the security measures of a trading platform are. Since hacks like Mt.Gox in 2014, Bitfinex in 2016 and Cryptopia in 2018, traders are uncertain which trading platform they can trust their cryptocurrency private keys to.
How can Trading Platforms be safe?
In the following we will examine which security measures make a broker as secure as possible and what you should pay attention to as a user.
SSL Encryption – Website Access through https Protocol
First you should check whether the trading platform is accessed via the https protocol, i.e. whether the domain has https: at the front of the URL. However, you can now assume this, since SSL-encrypted connections are now standard. Especially on websites where you have to log in and otherwise exchange data in any form. The SSL connection prevents that the transferred data can be read by third parties.
What cyber criminals may do is to lure users to a domain that looks exactly like a well-known trading platform so that users enter their login data at this phishing site. This is one of the reasons attackers got access to Binance user accounts in 2019 (the big Binance hack – read more further below). A wrong platform can be easily unmasked by checking the domain’s URL carefully, because it must contain a subtle deviation from the original URL. For example, an inconspicuous spelling mistake, one letter too few or too many, or a .co at the end instead of .com or vice versa. So you should always check the URL of your broker before you log in.
2 Factor Authentication
But now we come to the 2FA. This means that both the login and other measures such as payouts are only possible with a 2nd code. And this code or key can only be obtained via your own mobile phone, where the program is installed, if you use an app like Google Autheticator or Authy.
These apps generate number passwords that are only valid for about 25 seconds. So you need the specific mobile phone in your hand to read the code and use it for login or payout. This technology is really clever and does not allow any unauthorized access to user accounts.
One reason why Bitcoin and other coins could be stolen from platforms in the past is because hackers were able to gain access to private keys stored on the platform, allowing them to simply transfer the coins away. In the meantime, however, most platforms advertise the fact that the cryptocurrencies entrusted to them are stored in cold storage. This means that the coins are stored externally and not directly on the trading platform. The keys are also protected with a multi-key technology, so if you want to make a payout, you must have it authorized by at least a second party. This is what happens with manual withdrawals, which is now standard for most brokers.
One problem all cryptocurrency brokers and exchanges face is the fact that client funds cannot get insured in the same way as it is the case with traditional financial institutions. Only savings institutions (banks etc) qualify for deposit insurances. The only thing crypto companies can do is develop a kind of in-house loss management and give their customers some sort of insurance such as covering (hacking) losses to a certain extend through own contributions or profits. This is exactly what has happened in some cases, e.g. through Binance or Bitfinex. More on this in the respective paragraphs.
Security against Price Manipulation:
The fear of price manipulation is an issue especially for CFD brokers where people trade on margin / with leverage. Due to the fixed liquidation price in every trade, traders are dependent on the fact that the price development cannot be manipulated artificially. In other words, individual traders with large positions mustn’t be able to let the price fluctuate in the short term in such a way that other traders are liquidated without this price fluctuation corresponding to the real market price. In order to prevent such short-term price manipulation, large brokers constantly compare their price with the actual trading price of several large exchanges. Or the displayed price will always be an average of the prices of several leading platforms. The liquidation price will be based on this price so that traders cannot be liquidated unnecessarily or erroneously.
Safety after Past Hacks
Many see past hacks as an important factor to evaluate the security of a broker platform. However, this has to be considered in a differentiated way. Surely one can think that a platform that has suffered a hack in the past is less secure than a platform from which nothing has ever been stolen so far.
However, it is also possible to think that a platform that has been hacked once has learned from it and restructured its security measures so that they have since been among the most secure. In the past, hacks have had to do especially with hot wallets or easily accessible user accounts. Meanwhile, the 2 Factor Authentication via App, which is queried for every single step, makes it extremely difficult to gain access to user accounts and steal something from the platforms.
Reliability of the Company Owerns
Another big factor that comes to mind is that you have to trust the people behind the company. Even if all the technical security measures have been taken, the owners of the company may still have the opportunity to run away with the deposits entrusted to them. The probability of this happening is as low as possible if the management is very transparent. It must be known exactly who is behind the trading platform, what are their references, where are these people networked, what is the history of the company founders, their curriculum vitae, any known criminal history, shady business etc. So we should therefore pay attention to seriousness and transparency of the management level.
How does a Company deal with Crises?
Another quality indicator of a broker is how they have already dealt with previous potential crises. Have they ever proved that they can be trusted?
A good example is the Bitfinex trading platform. The platform lost about $72 Million in Bitcoin through a big platform hack in 2016. To cover their user’s losses, Bitfinex gave company tokens equal to their personal losses to all affected users which could be redeemed in US Dollars over time, so user funds could slowly but steadily be recovered.
Of course, the major trading platforms learned from such hacks, which means that the above mentioned security measures are now more or less standard.
The 10 Safest Bitcoin Trading Platforms
- 5 Safest Bitcoin Margin Brokers (Trading with leverage)
- 5 Safest Bitcoin Exchanges (Purchase / Sell Bitcoin)
Based on all factors discussed in this article we’ve come to the conclusion that the following 5 Bitcoin brokers platforms can be considered the safest among the international crypto margin broker platforms. Of course, this conclusion is based on our own opinion and evaluation only.
5 Most Secure Bitcoin Margin Brokers
#1 – BitMEX
What makes BitMEX safe?
All of the factors mentioned above are met. BitMEX of course is accessable through https only. Users are strongly encouraged to activate 2FA and use an Authenticator app for it.
User funds are kept in cold storage wallets and the Company doesn’t store private keys of BTC on any cloud server. Transfers get authorized by secure multi-signature technology.
BitMEX has never been hacked in the past and all of their security measures follow the latest standards.
#2 – Bybit
What makes Bybit secure?
Although Bybit is a very young Bitcoin margin trading platform, it already enjoys a high reputation among traders. The company was founded in 2018, but has been known since 2019, when knowledge about the trading platform spread like wildfire.
Bybit’s advantage is that they already meet all latest security standards, due to their late foundation they can avoid certain mistakes that others have made years ago.
Like BitMEX, ByBit has its BTC funds in cold storage, the website content is transmitted exclusively via SSL encryption, the platform has not suffered a hack so far and the company is also armed against price manipulation.
At Bybit, the company management is also very transparent. The company has no problem in making all its managers known by name. Ben Zhou, Mike Kayamori, Wayne Huang, Sam Bankman-Fried are the founders of Bybit, all of them can be thoroughly researched online.
#3 – Bitfinex
What makes Bitfinex safe?
Bitfinex has been hacked twice in the past, but the last hack has already been more than 3 years ago. In the meantime security measures have got improved to the latest standards and for sure they’ve learned from their experiences. At least the many traders that are still or again trading on the large broker platform seem to have faith again in the company. Also remember their good crisis management after the 2016 hack when they didn’t let their users down.
Bitfinex’s CEO Jean-Louis van der Velde is a man that can be researched easily since his name is known.
#4 – Binance
What makes Binance safe?
Binance is one of the best known crypto brokers. It has been in existence since 2017 and offers one of the most comprehensive services, as traders can trade CFDs with leverage, as well as buy Bitcoin (and other crypto currencies) directly for cash. Besides direct buying and profit trading, Binance even offers Bitcoin Futures Trading.
The platform has evolved steadily since its inception and is now also at the highest level of security.
However, Binance was hacked in 2019 and about 7000 BTC were stolen. This number may sound large, but it was only out of the 2% of the user deposits held in hot wallets for current trading operations. 98% of the BTCs stored at Binance at that time were not affected, as this large part is safely stored in cold storage. All losses are even fully reimbursed to the affected users. This hack experience is something that makes the Company especially trustworthy. Also, security measures have got enhanced since this attack caused by stolen user account data.
#5 – PrimeXBT
What makes PrimeXBT safe?
PrimeXBT is a quite young platform, as it was only founded in 2018, and only really known since 2019. The advantage of such young platforms is that they were able to learn from each other’s mistakes and could directly start with higher security measures. It goes without saying that PrimeXBT therefore fulfills all the criteria we mentioned. A hack was not yet the case and the likelihood for such is low.
A major disadvantage of PrimeXBT, however, is that the company ownership is very opaque. There is no known individual to whom the company is attributable. And users don’t get an answer to that question:
I know this question will never be answered but it will make the dummy think about it: Who is the CEO of @PrimeXbt and the people behind it?
— Ahmed Ben Othman 🇩🇿 🇬🇧 🇵🇸 ✌ (@FeralGlance10) April 11, 2019
5 Most Secure Bitcoin Exchanges
#1 – Kraken
What makes Kraken secure?
Operating since 2013 Kraken is one of the oldest and most trusted crypto exchanges worldwide. At Kraken it happened repeatedly that customer deposits were stolen. In these cases, payouts were made by attackers who gained access to user accounts.
However, this always had something to do with the fact that the user accounts were not sufficiently secured on the user side. 2FA and other settings such as IP whitelisting to prevent unauthorized access were ignored in these cases. Except for attackers, who always try to get account login data by fishing, Kraken was never hacked in that sense.
#2 – Binance
Why is Binance considered secure?
Since Binance is not only a margin broker (with moderate leverage) but also a buying exchange where you can buy cryptocurrencies with Fiat money, we also have to list the platform here.
As mentioned above, the company has already proven a very good crisis management when it comes to hacks and therefore enjoys great trust in the Bitcoin trading community.
#3 – BitStamp
What makes BitStamp secure?
BitStamp is, next to Kraken, one of the oldest exchanges where Bitcoin is bought and sold since 2011. Although the platform suffered a major hack in 2015 (round about $ 5million in BTC), it remained in business for the long term. BitStamp is still one of the big names in BTC exchange. Apparently, no users were hurt, since Bistamp bore the loss itself.
The hacker attack was aimed at Bitstamp’s Hot Wallet, the Bitcoin private keys in online storage used in the operational business. Unlike the majority of BitStamp’s users’ BTC private keys, which were also already securely stored in Cold Storage at that time.
An attack of the same kind would no longer be possible today, since BTC’s “remittance” is now doubly secured with a multi-signature technology.
#4 – Coinbase
What makes Coinbase secure?
Coinbase is of course one of the most well-known names in the field on Bitcoin exchange. The company is not very popular with some of the Bitcoin community, as they track what their users spend their Bitcoin on. It happens that user accounts are closed when they use their BTC for adult sites, gambling or other “dubious” services. This violation of privacy is a corporate culture that should have no place in the Bitcoin area in particular.
Apart from that it has to be mentioned that Coinbase has a private deposit insurance against hacks or other unauthorized user fund payouts. The insurance amount exceeds the hot wallet amount stored online. So user funds are covered in any case.
#5 – Coinmama
What makes Coinmama secure?
CoinMama is also one of the world’s largest Bitcoin exchange platforms and considered a quite safe one. It has been in business since 2013 and has never suffered a hack where BTC was stolen.
However, in 2019 there was a hack when 450 thousand user data got stolen, potentially rendering the accounts unsafe and allowing the attackers to steal deposits.
The best security measure to protect against hacker access to user accounts is 2 factor authentication because then your username and password alone get useless for attackers.