Exchanges Security Bitcoin Vs Internet Banking
It seems like you still keep your alt coins on exchanges! We all remember what happened to Mt. Gox and now BTER with NXT.. hasn’t that taught us a lesson? After all, investors and traders are still willing to take risks. What we need to do is to convince all traders to withdraw their crypto-currencies from exchanges and store them in a safer places like: encrypted wallets, paper wallets, COLD wallets.
For beginners, it is essential to get proper information on the masses and potential of the cryptocurrency and blockchain technology. There are many websites on the Binance crypto platform which are educating beginners about how to deal in cryptocurrency and get a successful experience.
Here are some good easy ways to protect your coins
Run your own wallet client (usually QT) and encrypt it!! For short term safety, putting a wallet on a device where you control the keys is a safe bet. For longer and safer storage, you can configure your wallets on a USB stick and save a copy in your safe deposit box. And always backup your wallet.dat but be weary of using cloud storage.
Paper wallet generators are an easy way to create a secure storage system for your coins. However, paper may not be durable enough for long term storage. You can configure key pair records in your favorite password management system. Password Box also gives you the ability to share your passwords so you can give access to your legacy manager or your lawyer so your crypto-currency holdings are not forgotten or lost in case you pass away.
This last bit of advice may be the best way to keep crypto-currency in a completely invisible way. You can create a mnemonic Bitcoin wallet from a phrase or a list of words. It’s called a brain wallet and most wallet generators have this option. But be careful, if you use a simple password or an obvious phrase that has been published before, you will lose your coins within 24 hours!
I understand it’s so much easier to trade by keeping your altcoins on exchanges. When you see an opportunity, all you need to do is click on a few buttons and you are ready to buy a new coin. Unfortunately, exchanges are not a safe enough yet to store coins long term. July 14th, there was a successful attack on Mintpal exchange. 30% of Vericoin were stolen because Mintpal did not store VRC in cold wallets (approximately USD$2,000,000 worth of coins).
Hopefully, these attacks will serve as wakeup call. Attacks like these provide a big incentive to the exchanges to improve their security. Even though this situation seems “awkward”, hackers are good for the crypto world. I believe the only way altcoins and bitcoin will really go mainstream is with the participation of exchanges security. The day people will feel “safe” keeping money in crypto exchanges, will be the day mainstream will adopt it, just like they do leave fortunes in a bank account accessible by internet solutions.
When people tell me about the Mt. Gox story, and that they are not investing in Bitcoin because it’s not safe, I simply tell them that they are doing the same thing, right now, with the banking system. Banking websites are being hacked as you read these words. The Associated Press reported in July that the bank account of a California escrow firm, Efficient Services Escrow Group, was hacked in December 2012 and January 2013, with three payments totaling $1.5 million wired to accounts in China and Russia. Only $432,215 was recovered, and the company shut down.Online banking frauds are rising year after year. Dailymail.co.uk reported that in 2012 banks intern frauds increased by 28% in UK. Billions of dollars are stolen in fraud hacks, phishing sites every year since banks started using internet solutions. The French bank Societe Generale lost £3.7 billion in one of the biggest corporate banking frauds of all time. In 2002 John Rusnak, a currency trader at US bank Allfirst, based in Baltimore, Maryland, and then a subsidy of Allied Irish Bank, pleaded guilty to fraud amounting to $691 million (£345 million).
I think the bitcoin network, exchanges and blockchain are still better trading tools than bank internet solutions (with a very small budget compared to what the banks are paying for security). In a couple of years with similar budgets, crypto-currencies exchanges will be much safer. Even though it’s theoretically a better model, there’s a lot of room for improvement. We need to make alt coins exchanges better and devs around the world should collaborate to make out community better. One day we will feel safe keeping our altcoins in exchanges, just like we have money in our bank accounts. When it happens, bitcoin will be at $USD10,000.