Pros: Very high security, Flexible buying option, High liquidity, Wide range of products
Cons: No advanced order types, Small range of cryptocurrencies
Pros: Very high security, Friendly UI, Innovative instruments
Cons: Lack of UI customization, fiat deposits only in USD, limited asset selection
Pros: 4 FIAT currency available, UI friendly to newcomers
Cons: Lack of UI customization
Pros: 6 fiat currencies, Very high security, High liquidity
Cons:KYC, Low customization options
Pros: Easy to use, 5 fiat currencies available
Cons: Lack of UI customization, KYC
Using secure bitcoin exchanges is important when trading cryptocurrencies. Security is one of the most vital qualities and many exchanges fail to build a robust framework or deliver the needed security for their users.
In the last few years, crypto exchanges considerably ramped up investments in their security practices out of necessity. Either due to regulatory requirements or if they want to stay in business in the long term without experiencing major security breaches.
The most secure bitcoin exchanges and trading platforms on the market as of today are:
Coinbase was founded by Brian Armstrong and Fred Ehrsam in 2012. In the following years, Coinbase became one of the most important on-ramps for Bitcoin investors in the crypto industry, serving a worldwide user base.
Coinbase has one of the most robust security systems, with the company wallets having FDIC insurance of up to 250 000 USD from the US government for users with US nationality.
The Security features offered by Coinbase are:
Gemini was founded by two of the most famous figures in the industry, Cameron and Tyler Winklevoss in 2014. The exchange applies very high-security practices as it successfully passed a SOC2 Type 1 examination. The brothers keep the exchange to the utmost quality. It offers a limited number of cryptocurrency pairs that cover important requirements. Gemini ranks amongst the most secure bitcoin exchanges.
Gemini is registered as Gemini Trust Company, LLC with headquarters located in New York and regulated by the New York State Department of Financial Services (NYSDFS). Gemini is one of the industry leaders in compliance, security, and design.
The Security features offered by Gemini are:
Bitpanda is a Europe-based exchange in Vienna, Austria. Founded by Eric Demuth, Paul Klanshek and Christian Trummer, the exchange gathered 1 million users worldwide thanks to its super user-friendly approach.
Bitpanda is considered one of the most friendly exchanges for newbies entering the crypto market. The exchange offers different instruments and integrated portfolio management to ease new users.
Kraken is one of the oldest exchanges, standing at the top since 2011. It withstood the turbulent markets and two hype bubbles in the crypto industry. Located in the USA, San Francisco, Kraken is regulated under FinCEN and by FINTRAC in Canada. It accepts users from all over the world.
What Kraken offers is an exchange packed with trading instruments and options, on top of that it has high security practices and very high liquidity.
The Security features on Kraken are:
Coinmama is a secure fiat gateway that does not keep user funds on the exchange, which makes it way harder to fall under a breach. The exchange was founded in 2013. During the years it managed to offer excellent services to users from over 200 countries.
Key features of Coinmama:
Coinmama has shown that its services are reliable and the platform offers high security due to its non-custodial nature. With the entrance of Coinmama to the market, buying and selling cryptocurrencies like Bitcoin became much easier.
Changelly is another entry-level user-friendly exchange that does not store user funds on the platform. Founded in 2015 by Eric Benz, Changelly has been on a mission to simplify the process of buying and selling Bitcoin and altcoins.
Key features of Changelly:
Being very easy to use, Changelly provides solutions for wallets, exchanges, and integration services from which many trading platforms like PrimeXBT and wallets like Exodus benefit greatly. It is a great solution if you want to buy cryptocurrencies with ease.
To evaluate how secure is an exchange you need to take into account a few points. There are many exchanges in the crypto industry that have poor security practices, poor support or are poorly coded overall. Of course, for every poorly managed one – a decent counterpart exists.
Offering a secure exchange is not an easy task as this usually comes with a high production cost. Lately, we see even newer and smaller exchanges ramping up re-investment in their security practices.
Exchanges that take their business seriously implement multiple capital protection measures that assure the safety of the user’s funds and the exchange’s capital. Different exchanges may implement different measures but all of them, without exception, use Hot and Cold storage for the funds. Many of the hacks on crypto trading platforms and exchange that lost funds were stolen from the Hot storage.
Other security practices that are implemented are:
How exchanges handle their presence, such as social media is a very important aspect when it comes down to communication. Does the exchange announce in advance a downtime or their current status? It is very important for the trading platforms to be highly transparent and active on social media as this can point out whether an exchange is in good health.
Liquidity is a very important aspect and quality for all of the exchanges. Without the needed liquidity you will not be able to buy and sell cryptocurrencies at all. Exchanges solved this problem by connecting to each, allowing for aggregated liquidity to exist. Some cryptocurrency platforms connect to quite a few exchanges to provide liquidity for multiple cryptocurrencies.
This in turn, however, results in chained downtimes as when one of the major liquidity providers goes into maintenance, usually, other platforms connected to it are also forced to go into maintenance.
From a customer standpoint – support is one of the most important aspects. When having problems, the users are dependent on the exchange to have a quality support staff that can resolve the problem in the fastest and most efficient way for both parties.
Having a good reputation is of utmost importance for any exchange in the crypto industry. Bad reputation leads to fewer new users joining in, to a lower volume that leads to lower liquidity and smaller profit margins for the exchange. Reputation is built over a long period of time and it is in the best interest of any crypto exchange to keep its reputation at a high level.
Order execution time, latency, and overall platform stability are of utmost importance especially if you are day trading. Lack of stability on any platform may lead to unwanted problems, such as unexpected downtimes or freezes, that may lead to a loss due to improper order execution or inability to close a position at a critical moment.
Exchanges that have high security and provide great user support and protection of user funds are still very rare in the crypto industry. The good news is that as the industry matures, higher quality exchanges and products are being built. If you are just starting with crypto, choosing a secure exchange may be in your favor.
No matter how similar some exchanges look, they are fundamentally different. Of course, one should always evade whitelabeled solutions or off the shelf exchanges – if one gets hacked, the rest will follow in no time.
Differences in security infrastructure, trading instruments, how they treat their users, and in management are easily noticeable. The importance of knowing how exchanges operate and especially knowing if they live up to their reputation is becoming more and more important.
With all of the hacks and malicious actors present in the crypto industry, it will take time until it matures. Of course, security is not the only important aspect for an exchange to be considered safe and reliable.