Are Exchanges Safe Places to Keep Bitcoins?
When most people start to get excited about Bitcoin there tends to be a list of frequently asked questions that they go through immediately. How do I buy it? Who accepts it? What can I buy with it? Is gambling with bitcoin legal? Where can I store it? How do I protect it?
Security is always one of the obvious concerns that first time bitcoin traders have. With physical money, the question of security has a pretty natural answer but when you are talking about digital currencies it’s just not as simple as keeping it hidden away under lock and key.
There are hackers out there that come up with new and innovative ways to steal bitcoin every day and it’s up to the individual to understand how to keep their cryptocurrencies secure. At this point a new batch of questions emerge. Where are the safest bitcoin exchanges? What’s the safest way to store my bitcoin? Are bitcoin exchanges safe places to store my bitcoins?
Major cryptocurrency exchanges are relatively secure ways to store your Bitcoin but it’s typically not advised for larger amounts. The major exchanges are essentially big money targets for hackers who are constantly developing new ways to steal bitcoin from people.
Over the years that Bitcoin has been in digital circulation, there have been multiple accounts of bitcoin being stolen via hacking of some of the major exchanges. The most recent crypto robbery was of one of busiest exchanges in the world based out of South Korea where over 30,000 customers’ information was compromised in the attack.
With that said, it’s easy to get into a comparative loop of digital security insecurities. While the major exchanges are those big money targets, they also reserve the right to cancel your account at any time for any reason and seize the funds that are in your account. That doesn’t mean that they will just arbitrarily steal your money but if you are dealing with a less popular exchange it’s a possibility that does exist.
The common consensus on the internet through the crypto communities is that storing small amounts of Bitcoin on reputable exchanges is actually pretty harmless. However, if you have larger amounts that you need more security for you’ll need a more secure digital wallet.
For large amounts of Bitcoin where you need the maximum security you can opt for what is called “Cold Storage”. The term “Cold Storage” refers to when a person takes all of their bitcoin keys off of any known servers and computers and instead stores them physically on a device that is not connected to the internet so it can’t be hacked.
People sometimes use USB devices or other mediums of data storage that aren’t connected. Some have even been known to buy a computer specifically for the storage of their bitcoins and go through steps to never connect it to the internet so hackers can find it and will never be able to access it. Here is a list of safe cold storage wallets that are popular in the crypto space.