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Because of their decentralized nature and anonymous trading, cryptocurrencies are a big target by hackers and internet scammers. These platforms involve large sums of money, which makes them an enticing target for cyber attackers. Since the launch of crypto exchanges, hackers have managed to steal close to $1.7 billion worth of cryptocurrencies.
In May 2019, leading crypto exchange, Binance was hacked, resulting in a loss of $40 million worth of bitcoin. Other exchanges that have suffered cyber-attacks leading to enormous losses include Bitstamp ($5 million), Mt. Gox ( $350 million), Bitfinex( $72 million), NiceHash( $60 million), Coincheck ( $400 million) and Zaif( $60 million).
The situation is set to worsen as nearly 54% of cryptocurrency exchanges have security breaches that make them vulnerable to cyber-attacks. These include hacking, phishing, scamming, and supply chain attacks.
As such, cryptocurrency exchanges must implement adequate security measures to keep users’ digital assets safe. These measures will significantly reduce cyber-attacks and facilitate secure trading, vital for attracting institutional investors to the crypto space. Here are five essential security features that any crypto exchange should implement to enhance an exchange’s security.
A registry lock is a security feature that enables a domain name owner to lock down the domain’s information. This feature blocks a name on different operations, including the contact modification, DNS server modification, domain name deletion, and the domain transfer. In crypto exchange platforms, domain lock prevents hackers from changing several aspects of the domain name. The aspects at risk include registration details or modifying the DNS server.
Registry lock is executed via a highly secured manual process that secures all strategies domain names. In case of an attack where hackers send a request to make changes to your domain, the registry lock service provider conducts a three-way security passphrase check between the domain name owner( in this case the exchange), the registrar( service provider) and the registry. The registry lock will stop hackers from making changes in the registration accounts, making it impossible for them to penetrate the system.
Few crypto exchanges use this security feature. A recent survey by ICOrating.com established that only 2% of crypto exchanges use the registry lock feature. Registry lock enhances domain security in crypto exchange platforms.
Integrating Cold Wallet Storage
Cold wallet, also referred to as cold storage, is an entirely offline mechanism of storing cryptocurrencies. Unlike hot wallets, cold wallets are not susceptible to cyber-attacks as they are entirely offline. Cold wallets usually take the format of a USB drive or a hardcopy of the wallet address and private keys. Most cold wallets also feature advanced security features such as multi-signature authentication and biometric-enabled authentication.
Crypto exchanges can enhance security by integrating cold wallets into the exchange such that users can trade directly from their wallets. Integrating cold wallets to the exchanges offers multi-layer protection to users’ funds. If the exchange is hacked, users’ assets in cold wallets will not be stolen.
Recent advances in crypto wallets have seen the launch of warm wallets – a hybrid of a cold and hot wallet. Warm wallets act as a cold wallet when offline and hot wallets when connected to a host computer. Warm wallets are a secure form of hot wallets, and crypto exchanges can integrate them into the platform to secure users’ funds.
Domain Name System Security Extension( DNSSEC)
DNS security extension (DNSSEC) functions to secure information in a domain name.. DNSSEC authenticates DNS data using digital signatures based on public-key cryptography and private signatures.
In crypto exchanges, DNSSEC enhances security by validating data’s authenticity through a combination of public and digital signatures. This protocol prevents users from accessing fraudulent websites by rejecting illegitimate unauthorized DNS entries. This, in turn, prevents users from falling prey to cyber-attacks such as pharming and cache poisoning. DNSSEC also ensures only legitimate transactions are verified by guaranteeing the correct matching of signatures.
While DNSSEC is a vital security protocol, less than 10% of crypto exchanges have it. DNSSEC is an essential security feature for any crypto exchange to safeguard users’ digital assets by protecting them from malicious activities.
Implement Web Protocol Security
Crypto exchanges can enhance security by implementing web protocol security. There are several security headers present in web protocols below.
- X-XXX-Protection- A protection header used to protect crypto exchange users from cross-site scripting attacks.
- HSTS (HTTP-Strict-Transport-Security) – A security header that offers HTTPS protocols to all browsing protocols.
- X-Frame-Options- A security header used to prevent click-jacking attacks.
- X-Content-Type-Options- Security header to keep content sniffing at bay. It also prevents XSS and code injection attacks.
- Content-Security-Policy (CSP) – Lowers XSS attack risks.
Anti-DDoS Attacks Security Protocols
DDoS (Distributed Denial-of-Service) attacks have become common among crypto exchanges. These attacks involve malicious activities such as flooding the platform’s servers with unnecessary heavy traffic to cause heavy loading. This causes crypto exchange services to become temporarily unavailable to users leading to costly downtimes since trading activities can no longer occur.
Various security protocols can be employed to prevent DDoS attacks. One such efficient security protocol is the use of anti-DDoS hardware and software modules such as specialized web applications or load balancers. There are also specially designed software and appliances that offer protection against DDoS attacks.
Is Block DX Safe?
Block DX is one of the most secure, fastest, and fully decentralized exchanges in the crypto space. The platform employs the security features discussed above to ensure users’ assets are protected. Traders get full control of their assets, as funds remain in their wallets while trading.
The platform is 100% decentralized with no central entity or third parties controlling trade. All trades are conducted via atomic swaps; thus, there are no proxy coins or IOU’s. Indeed, the exchange is very safe as you’re always in full control of your assets in your wallet.
Crypto exchanges have become a lucrative target for cybercriminals as they hold millions of dollars in crypto. These platforms must employ rigorous security measures and protocols to safeguard users’ assets and develop a more secure crypto trading ecosystem. You can always trust Block DX for your assets’ safety thanks to its top-notch security features and the 100% trustless ecosystem.