The Blockchain industry has grown exponentially over the past decade, which has led to a rapid increase in the trade and exchange of cryptocurrencies. One true ability of this technology to decentralize and eradicate intermediaries and is the driving force that has led to the enormous expansion of the blockchain industry.
Anonymous Guest Blogger: Satoshi Nakamoto? name used by a pseudonymous person or persons who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation.
However, an increase in cybercrime cannot be overlooked and unless cryptocurrency exchanges implement adequate security measures, things could turn out to be ugly. So, to help the cryptocurrency exchanges elevate their security levels, we have put together a list of useful security measures.
1. Plan a Secure Ecosystem
Your database, client-side, and server-side technologies must be given due consideration. For instance, SQL injections are rampant and continue to shake up the world of the internet. Likewise, the use of malicious Java snippets is an increasing menace, and the only way to limit this is by restricting the actions of third parties — customers, subscribers, and enquirers.
You don’t want an imposter disguised as a customer or subscriber to insert some malicious code into your ecosystem. So, avoid letting third parties insert data that can threaten the safety of the cryptocurrency exchange website.
While it is almost impossible to completely avoid DDoS attacks, SQL Injections, and XSS attacks, you must plan your ecosystem in a manner which focuses on security over costs. After all, as a cryptocurrency exchange, you deal with third-party funds and any negligence could lead to grave consequences — both legal and financial. After all, you sure don’t want to end up like the Mt. Gox CEO Jed McCaleb, who allegedly lost 80,000 BTC.
2. Educate Your Customers
Blockchain is a relatively new technology, but people continue to plunge into it due to the hype. At times, investors who invest in these currencies are clueless about how cryptocurrencies and blockchain work. Some even use the two terms interchangeably. This lack of awareness only makes it more challenging for the cryptocurrency exchanges to ensure the safe and secure exchange of this virtual property.
Therefore, it is essential that cryptocurrency exchanges go that extra mile to educate and inform investors by sending out regular educational materials such as white papers and newsletters, with a core focus on better security measures.
3. Keep Things Under Cover
Errors are for the developers to deal with and not for the snoopy hackers to get their foot in the door. As a matter of fact, improper error handling can reveal much more data related to core implementation, than you’d ever want to. To prevent stack traces and data dumps, you need to have the right error handling mechanism in place. Unless you do that, you may be unknowingly paving way for the criminals to get their head around the potential flaws in your ecosystem.
So, while these cybercriminals continue to hang around your cryptocurrency exchange, it’s crucial that you focus on adequate error handling that does not reveal data such as codes, or directory files to anyone other than your developer.
4. Don’t forget 2FA
Ever wondered why the Payment Service Directive 2 (PSD 2) makes two-factor authentication (2FA) mandatory for banks? Simply because it provides an additional layer of security and ensures secure authentication. Now the same measure could help you prevent fraudulent transactions and result in enhanced security.
5. Gain customer’s trust with an SSL Certificate
Having an SSL Certificate can help in gaining the trust of a customer, as it connotes that the transmission of data is encrypted, and the site is secure. With the increasing awareness about cybersecurity, it only helps when the URL bar shows the green padlock, which builds trust.
So, make it a point to get an SSL certificate or EV SSL Certificate for your cryptocurrency exchange.
6. Stick to cold storage
Cryptocurrencies stored in online wallets remain vulnerable to cyber-attacks. The only other option is to store them in cold storage, which refers to hardware wallets like Trezor. However, the downside is that it costs around 100 US Dollars, but if your investment potential is beyond that, then the first thing to invest in is a cold storage wallet.
7. Regular Pen Tests
In 2018 alone, cybercriminals have stashed away over a billion dollars from cryptocurrency exchanges. Although there is no way to completely avoid cybercrime, cryptocurrency exchanges need to plan adequate preventive security measures.
To do this, it is essential to discover the loopholes in your cryptocurrency exchange’s ecosystem with regular evaluation and to plan measures accordingly. One way of evading these threats is by hiring an Expert to do regular penetration (pen) tests, to identify vulnerabilities and help fix them.
8. Plan Default Security Mechanism
There have been several cyber-attacks, which have failed due to proper default security mechanisms in place. For example, the most recent Picreel cyber-attack did not harm the organization as the default security mechanism detected anomalies and triggered a certain security mechanism that automatically deactivated the system.
So, you need to have a mechanism in place, which can identify anomalies and automatically take control of the ecosystem when a threat is identified. Another thing to do is to implement Salting and Hashing and making it difficult for the crooks to read the data, even if they manage to steal it. Also, SSL certificate helps to a great extent and must not be ignored.
9. KYC isn’t boring…it’s essential
Know Your Customer (KYC) norms which are currently applicable to most cryptocurrency exchanges, across the globe, is a wise decision made by the concerned authorities. Whether or not, your cryptocurrency exchange falls within the ambit of mandatory KYC regulations, implementing it can prove to be useful. Especially, because most cybercriminals are making use of cryptocurrencies as Ransomware.
For Millennials, cryptocurrency exchanges are the latest alternative to the traditional stock exchanges. As this is one of the most inquisitive generations, you can start gaining their trust with an SSL certificate or an EV SSL Certificate. After all, cryptocurrency exchanges across the globe attract a decent number of visitors — at least ten thousand visitors per day. Hence, there is a sheer need for enhanced security measures to protect the integrity of cryptocurrency exchanges.