NormShield Blog

Are Bitcoin Exchange Sites Safe?

bitcoin exchange safe

Are Bitcoin Exchange Sites Safe and What Are the Vulnerabilities? Bitcoin Mania is all over the world. Bitcoin interest has expanded from Wall Street habitues to housewives in South Korea. Bitcoin trading became so popular that several major websites had to pause the admittance of new accounts. Cyber security is naturally a significant part of this Bitcoin issue. Can we be sure about the safety of Bitcoin exchange sites?

OKEx, Bitfinex, Binance are some of the major websites that have the largest volume in the Bitcoin exchange market. However, there are things to consider if you are planning to work with them. Their vulnerabilities should be considered before engaging in Bitcoin exchange

Consigning Personal Identity Information to Bitcoin Exchange Sites

One of the security vulnerability of Bitcoin exchange sites is the leak of personal information. While being a member, sites ask for our identity information and pictures etc. In case of being hacked by malicious users, our information can be disclosed. Some Bitcoin exchange sites require us to share our personal identity information to sign up through a mechanism called 2FA (Two Factor Authentication). Otherwise, our daily amount of Bitcoin exchange is kept considerably limited.

The 2FA code aims to prevent others from signing into our account even though they reach our username and password, which is good. But the confirmation process requires using our mobile phone. The safety of our SIM cards is another issue that carries a risk. For example in January, some Turkish bitcoin exchange sites have been claimed to be hacked by copying the SIM cards of the users.

By signing up, we take the risk of giving all our identity information to those sites without any regulation. This may lead to an unpleasant situation in a case of being hacked.

Phishing Attacks and Security Tests

Here is one of the most common fraud of hackers: phishing! This means that hackers attack the personal information and money of users by having similar domains with official exchange sites. NormShield offers a service to detect them. (services.normshield.com/phishing-domain-search/binance.com)

The Bitcoin exchange sites regularly have to go under continuous vulnerability management and risk score tests to enhance their security. It is certainly their responsibility to do that. So it is important for us to follow their average points of security. The process can be tracked by using applications like CyberRiskScore.

Mismanagement of Exchange Sites

Apart from the hackers, the credibility of the Bitcoin exchange sites themselves are also important. Naturally, those websites have the authority to suspend illegal accounts. As mentioned here, themerkle.com/poloniex-users-suffering-from-frozen-accounts-suspended-withdrawals-and-disabled-markets one of the major websites of Poloniex engaged in suspending accounts. Some people claimed that they couldn’t achieve their confirmed Poloniex accounts without any explanation from consumer support service. The users of the site turned towards withdrawing their Bitcoins.

In August 2016, Bitfinex announced that hackers had stolen $77 million worth of bitcoins. The users carried the burden, with the company forcing them to take a 36-percent reduction in the value of their Bitcoin deposits. There raised suspense about the company’s credibility.

As the cybersecurity is the backbone of Bitcoin exchange, now the exchange sites take a variety of precautions in order not to suffer more. Time-lock system is one of the examples, through a secondary code given to users, it serves customers the possibility to backup the transaction within 24 hours in a case of hacking. The sites also warn the users from to prevent unsafe scenarios caused by a moment of absent mindedness.

What About the Security of Turkey Bitcoin Exchanges?

Turkey is also one of the areas surrounded by Bitcoin craze. In a daily basis, 3000 BTC is said to be transacted in the market. That means Turkish users have Bitcoins of approximately 30 billion dollars. In such a huge market volume, an increasing number of technology experts and bloggers are writing about the details of a secure Bitcoin exchange. Paribu, BTCTurk, Koinim and Koinex are considered as the most secure Turkish Bitcoin exchange sites.

Yet, the above mentioned Turkish SIM card fraud poses questions of security. Users claimed that their GSM Operator SIM cards were copied. The relatively high commission rates of Turkish exchange sites may canalize the hackers to gain easy money. Maybe it is better for Turkish to think of an arrangement on the high commissions.

15 global bitcoin exchange website scores 72,4/100 in NormShield Risk Score Cards product, while Turkish websites’ score is 77,5/100. Exchange sites fails mostly in Patch Management and Reputation whereas they are doing better in Leaked Accounts and Application Security.

Non-regulation is what makes Bitcoin exchange both strong and vulnerable. Its strength comes from allowing users a domain free from governments financial market forces. But cybersecurity issues mentioned above, bring the vulnerabilities that should make the users think twice.