Finding a Safe Crypto Exchange in 2022 is Pivotal – Here’s How…
‘Trust’ and ‘cryptocurrency’ aren’t phrases that tend to go hand in hand. That being said, when it comes to using a cryptocurrency exchange, trust is essential.
The same can be said for security – you need to know that the entity handling your wallet or funds is going about things the right way and that you aren’t at risk of losing it through a hack or negligence on the exchange’s part.
There are now almost 500 centralized exchanges out there – yes 500 – and the issue of which is the safest crypto exchange is, therefore, more important than ever.
In this guide, we break down what constitutes a trusted crypto exchange and what to look out for before you hand your cryptocurrency over to someone else to look after.
Age Isn’t Just a Number
A safe crypto exchange isn’t determined so by its age alone, but it can contribute to its overall reputation in the space.
An exchange that has been going for five years or more will have already experienced at least one bear market and lived to tell the tale. This experience can matter when it comes to making sound business decisions during difficult times.
An older exchange is also battle-hardened and has stronger fundamental principles in place when it comes to protecting your money. Too many fly-by-night exchanges pop up in a bull run and then exit scam just a few months later.
It’s no coincidence that older exchanges typically rank higher in volume, with Binance and OKX (both established in 2017) being first and second in the top 10 crypto exchanges by volume. Coinbase (2012), Gate.io (2013), Huobi (2013), Kucoin (2017) and Crypto.com (2016) take up five of the remaining seven places in the top 10.
This shows how older exchanges are typically the most trusted crypto exchanges, and therefore the most used.
A safe crypto exchange stays on the right side of the law
Crypto compliance has been the core topic of conversation within the crypto space since it really came onto the radar in 2017.
Since that time, exchanges have taken (or been forced to take) steps to ensure that the criminal element that uses its platforms is minimized, and we can use an exchange’s attitude towards such things as a guide as to whether we can consider it a trusted crypto exchange.
Of course, the cryptocurrency world is a global beast and spreading all the time. This makes crypto regulation a patchwork affair that differs from country to country, but we can get a steer on how compliant an exchange is by seeing how keen it is to comply with local financial laws.
Given the complexity of the compliance topic and its global variances, it’s very hard to give a definitive answer as to which is the most compliant exchange.
Almost all the top 10 crypto exchanges now require full Know Your Customer (KYC) and Anti-Money Laundering (AML) checks before you can open an account.
You should be wary of those that still allow the opening of anonymous accounts. This shows that they are willing to turn a blind eye to regulations and therefore will attract a more criminal element, which means they are more likely to be investigated and perhaps even shut down by authorities. Naturally, this puts them far down the list of safest crypto exchanges.
Check the compliance element of any exchange you plan to join before you do so. This can usually be found very easily on its website.
How secure are your funds?
Security is a huge factor when looking at safe crypto exchanges. An exchange that doesn’t look after its backend properly is liable to get hacked, putting customer funds at risk and could lead to you getting rekt.
There is an important difference between types of hack – the kind of hack that brought Mt. Gox to its knees in 2014 saw funds stolen from the wallets of the exchange itself, representing a flaw in the platform’s security.
Other hacks, for example the Coinbase hack in 2021, see individual user accounts compromised due to phishing attacks and the like. These are typically not the fault of the exchange and do not affect the exchange’s funds, so they are not ‘hacks’ in the strict sense.
Unfortunately, there is no easy way to check how secure an exchange is before something happens to it. Only when an incident occurs can it be shown where the vulnerabilities were.
Hacks can happen… Even at a safe crypto exchange
Our only guide then is how many times an exchange has been hacked in the past. For example, Kraken, which was founded in 2011, has never been hacked, showing that it should clearly be towards the top of any crypto exchanges list when it comes to security. The same can be said of Coinbase, although both have had user accounts compromised in the past.
Binance, the biggest exchange by volume, has been hacked once in its history. This shows that it is a very safe crypto exchange considering how much of a honeypot it is, and indeed almost all other exchanges out there have been hacked at least once in their life.
You should only be wary if an exchange has been hacked multiple times (although multiple hacks are usually enough to kill an exchange anyway) or if it has launched very recently – usually, one incident is enough for an exchange to overhaul its security.
You should also judge how an exchange handles your own account security to get an idea of how secure it is overall. If it only offers password logins and has nothing further, such as two-factor authentication, you should assume that it treats its own security in a similarly shabby way.
A good reputation often proceeds a safe crypto exchange
Even the most safe crypto exchange can experience problems – it is how they deal with them that matters. This is why review sites should help guide you when it comes to which are the most trusted crypto exchanges. They should not represent the first and last word on the matter, but they will give you a very good idea of what the exchange does well and what it does badly.
Check out various review sites, both mainstream and crypto-focused, to give yourself a really clear idea of how their users feel about these exchanges.
If you spot a theme, for example, lax security or poor customer service, consider how much that matters to you compared to how you’ll use the exchange.
Trust, but verify, if you want to find a safe crypto exchange
Trust, as they say, has to be earned, and this is the case with crypto exchanges. Those who have been in the crypto space for a few years will likely have a favorite exchange and will only swap if something extraordinarily bad happens. Many crypto users have wallets with multiple exchanges rather than putting all their eggs in one basket, and this is probably a sensible move.
Those looking to make a shortlist of safe crypto exchanges should draw on the experiences of those already in the space. This can come through reviews and other user-based feedback. Once they have their selection in mind, drill down into the compliance and security aspects of the exchange to see if these meet their expectations.
No exchange is perfect, but some supposed safe crypto exchange platforms are much more trustworthy than others. However, don’t forget that any centralized exchange has the power to seize your assets if it thinks you have transgressed in any way. Or, on the orders of a government. Ensure that your long-term holdings are held off these exchanges just in case and to make sure you play it safe.
With over a decade in the online gambling industry and a passion for all things crypto, Ethan offers valuable insight into playing at Punt with in-depth reviews, gambling guides, and informative content to help our readers make the best of their Punt Casino experience. Get all the ins and outs of crypto gambling with Ethan and our team of gambling experts right here, on the Punt Casino blog.