Thanks to the high volatility of Bitcoin and a slow but steadily changing regulatory approach, the popularity of cryptocurrencies is rising. As a result, cryptocurrency trading has also become a lucrative business. As the number of cryptocurrency traders continues to rise, the number of crypto exchanges is also increasing rapidly. However, with increased trading activity, exchanges have also fallen prey to cyber attacks. In the first nine months of 2018, hackers stole $927 million worth of cryptocurrencies from the cryptocurrency exchanges.

Unfortunately, various security-related vulnerabilities have made it considerably easier for hackers to steal from the crypto exchanges. Nearly, 54% cryptocurrency exchanges have security holes that cybercriminals can exploit and get away with traders’ hard-earned money. To attract more crypto traders and build a positive image, you must ensure your cryptocurrency exchange software boasts the following six essential security measures.

1. Use a Warm Wallet with Cold and Hot Ones

A hot wallet allows you to make transactions directly on cryptocurrency trading software. However, being connected to the web, it is also at high risk of network-based cyber attacks. A cold wallet or hardware wallet, on the other hand, resides off the web.

Usually, it is a paper wallet (a printout of the wallet address and private key) or a hardware wallet such as a USB drive. As a result, it is not susceptible to cyber attacks. However, you have to connect the USB drive to your computer and pass a few security checks to transfer the funds to the exchange. Thus, it requires more transaction time.

As a standard practice, traders are asked to keep only walking-around-money in their hot wallets while the rest remains safe in the cold ones. However, there is a third type of wallet called warm wallet which offers the best of both hot and cold wallets. It is a dedicated hardware device that can generate private keys and signs transactions.

It can also transmit these transactions on the network by a physical connection through a host computer. It acts as a cold wallet when disconnected from the computer. When connected, it becomes a hot wallet. However, the private key remains unexposed, making it more secure than a hot wallet.

2. Use Registry Lock

A registry lock offers an additional layer of security by locking your domain name at the registry level. It essentially stops hackers from illicitly modifying or deleting various elements of your domain name including the registration details. According to a recent ICO rating survey, only 2% of exchanges use registry lock.

You can find several registry lock service providers on the web including VeriSign and Melbourne IT among others. Usually, when you send in a request to make any changes to your domain, the service provider makes a three-way security passphrase check between the domain registrant (you), the registrar (service provider) and the registry. This ensures the highest level of domain security.

3. Use DNSSEC (Domain Name System Security Extensions)

Domain Name System Security Extensions (DNSSEC) is a set of protocols that authenticate all DNS queries. It uses a combination of public keys and digital signatures to verify the authenticity of the data. Thus, DNSSEC can reject unauthorized DNS entries and responses protecting users from accessing fraudulent websites or falling prey to malicious activities such as cache poisoning and pharming. Unfortunately, only 10% of exchanges use DNSSEC.

You can sign your domain name with DNSSEC through your domain name provider such as Go Daddy. The process will vary depending on your DNS hosting provider. However, you will need your Top-Level Domain (TLD) to be signed and your domain name registrar and DNS hosting provider must also support DNSSEC. Remember though, DNSSEC can’t provide data confidentiality or protection against DDoS Attacks.

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