It is a very difficult task especially for newbies who just ventured into cryptocurrency to choose which of the very many exchanges to store their funds in. It is a tough choice to make for everyone. I personally had to make this choice after I recently got out of a poor and insecure platform. It is not news that many users are also stuck in platforms that milk them in the name of transaction fee and at the same time, prone to hacks. It is worthy of note that hacks happen on a daily basis on numerous platforms, not just crypto exchanges. Anytime this happens, the data and funds of the users are exposed and most times, disappear forever.
In this article, I will share with you what to look out for in an exchange. A reputable exchange must have a number of characteristics that make it impenetrable for hackers and flexible for the public to trade on.
The likes of Altsbit lost approximately $70,000 worth of cryptocurrency in February, 2020 after which they announced they would be shutting down in May, 2020. Even the most popular of all exchanges, Binance, lost a massive sum of $40 million worth of Bitcoin in May 2019. The hackers used a phishing scam and malware to hack into Binance. As a result, Binance promised to increase its security, but users are understandably wary.
The undeniable fact is that most of these exchanges lagged in terms of proper security measures. Therefore, here are seven (7) ways to identify a bad exchange.
WEAK COMMUNITY BACKING
IRRESPONSIVE SUPPORT SYSTEM
CUMBERSOME DEPOSIT AND WITHDRAWAL PROCESS.
I am sure you would agree with me that security comes first when life and property is involved. Nobody likes to lose hard-earned funds so, here are some of the characteristics of an exchange that lack proper security measures to secure funds.
They do not ensure and make it compulsory for new users to verify their identities via a KYC process.
The platform's team agrees with regulator demands on how the exchange should be run.
The exchange platform does not provide and advise users to use the two-factor authentication feature to further secure their accounts.
Silence from operators and the support team who may stop responding to community questions/allegations when security questions come up.
In most cases, the quickest way out is to withdraw your coins to an offline wallet once purchased. That way you no longer need to worry about how safe the exchange is, because you now have sole control over the private keys.
The purpose of UI is to get the product to the user in a timely and elegant way as possible. An exchange that does not simplify features and transaction methods for her users does not have the interest of her users at heart. The colors should be warm and inviting to lighten the mood of a user, make him feel at home trading on the platform. The bad UI design will make the users feel the website is complicated and difficult to operate; the good one will guide users how to interact with the site in a clear and intuitive way.
The designs lack of contrast
Clunky and sluggish form
Let’s face it. No one likes to be overcharged when making any transaction. A reputable exchange will make known to her users how much it will cost to perform a buy, sell, deposit or withdrawal. Every exchange user should have the knowledge and access to information pertaining to how his money is being spent. While some exchanges prefer to keep this information hidden from users, others do not. For the later, it builds trust and transparency between the platform and visitors; new and old.
Therefore, here are a few things to look out for:
Exorbitant charges for currency deposits.
Identity verification charges. No one should ever charge you for a KYC verification.
Wallet maintenance charge. It is no news that some exchanges deduct fees for “maintaining” your wallet for you. Imagine walking into a mall and getting charged for using the trolly. Yeah. I thought so too.
Very high withdrawal charges.
Weak Community Backing
Exchanges don’t exist in a void, and those that are reaping all reward without giving something back really don’t deserve your attention. A platform with a solid community backing will:
Participate, engage and solve queries on public forums like reddit, bitcoin talk, medium, twitter and telegram. Bitfxt technology is very active in this area.
Contributing to blockchain events, hackathons, and sponsoring cryptocurrency education initiatives. Bitfxt hosts a practical trading class on Zoom every Thursday and Friday. Join here.
An exchange whose users frequently appear on public forums with constant complaints and grievances is not one that deserves your attention. Look out for the below characteristics:
Constant media allegations of theft
Bad product reviews on Playstore, App store and other product purchasing platforms.
Irresponsive support system
It is important to research each platform’s customer service records before depositing. Some exchanges are really fast to respond to customer queries, while others may take several hours and days to get back to you. Keep in mind that you will occasionally be interacting with support at some stage especially when it comes to issues related with identity verification. This stage usually involves several emails, and document attachment so it’s important that the platform has employed enough support staff to respond to users in time.
Cumbersome deposit and withdrawal process
A good UI/UX gives users the ability to move around the website and find helpful resources. The same should apply to the Deposit and withdrawal section. Users should not have to wait for days before their withdrawal is approved, neither should deposits be slow. All transactions should instantly reflect on the user wallets as soon as they are made.
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