Though the likes of Coinbase and Binance are still the top and bitcoin and cryptocurrency exchanges we have right now, the rising star and the feature-rich exchange— FTX, is definitely quickly catching up despite only launching operations in 2019.
While FTX surely is a great exchange to use by people worldwide, is it actually safe enough to store your coins with?
- FTX’s password requirements – in the registration phase, FTX requires their users to use passwords that are complex enough for hackers to have difficulty in cracking them.
- 2FA requirement – just like most exchanges, FTX requires their users to have 2FA enabled to be able to withdraw their funds, for additional security.
- Proactive CEO – FTX’s CEO, Sam Bankman-Fried a.k.a. “SBF” is known to be really active on Twitter, and actively responds to bug reports. While this is not a guarantee of FTX’s security, it just shows that the CEO is taking exchange feedback and site uptime really really seriously.
So, is FTX actually safe?
Yes and no.
Unlike other exchanges, FTX has only existed since 2019, which makes it a really really young exchange; and unfortunately, there is very little information on the web concerning FTX’s back-end security practices.
Though FTX has been running for 2+ years without seeming to have a single security issue, we really can’t know for sure if they could fend off the hackers for longer amounts of time. Always remember— no matter how big and reputable a certain cryptocurrency exchange is, it doesn’t guarantee that it’ll be secure forever. Exchanges are a very hot target for hackers simply because they hold a lot of coins from their users.
As always it’s far safer for you to store your funds on a non-custodial wallet; and preferably, a reputable hardware wallet like the Ledger Nano X. That way, even if every single exchange in existence gets hacked, your funds will remain untouched.
“Not your keys, not your bitcoin”
While this quote is directly referring to bitcoin, it should apply to pretty much every single cryptocurrency. Only use wallets whereas you have control over the private keys/recovery seed. That way, even if the exchanges you use gets hacked, your coins don’t get lost along with it.
Another reason is that one of the main selling points of bitcoin is that it’s unconfiscatable. When you leave your funds on centralized exchanges, it defeats that purpose. Exchanges in general can lock up your account(s) regardless if you did something wrong or not. A lot of people think that this is easily fixed by simply submitting a support ticket to the exchange, but in some cases, it’s not. This occurrence has happened a lot more than most people think.
Exchanges are exchanges
Use exchanges for their sole purpose, as a platform to exchange your money for some bitcoin and other cryptocurrencies. Don’t get us wrong, FTX is providing a great service, with them having really cheap exchange fees and withdrawal fees compared to the likes of Binance. But it doesn’t mean you should unnecessarily leave your funds there.
Simply withdraw your funds after every transaction using exchanges like FTX, the same reason why you wouldn’t leave your hard-earned money on money remittance centers and money exchangers. Instead, you simply withdraw the cash and lock them up in your personal safe or store them in your bank. The same thing should be done with your coins and tokens. Simply send them over to your personal wallet whereas you have control over the private keys.
Yes, you need to leave funds on exchanges to be able to trade. But, it’s heavily suggested that you only leave funds on FTX that are actually being traded. If there are a certain amount of coins that are just sitting on your FTX account without it being traded, withdraw them as soon as possible. This shouldn’t be a problem though, because FTX’s withdrawal fees are quite cheap.
P.S. If you don’t have an FTX account yet, you can use our referral link here to help us out and to receive an extra discount in trading fees!
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Where do I keep my funds instead?
We heavily suggest the usage of hardware wallets, especially if you own coins and tokens worth significant amounts of money.
Hardware wallets are small devices made specifically for securely holding your coins and tokens, and are small enough to fit in your pocket. We heavily suggest using a hardware wallet instead, if you’re holding a significant amount of cryptocurrencies. A hardware wallet is definitely your best choice for holding coins and tokens without the fear of getting hacked.
- High security – your wallet’s private keys never leave the device. Hence, you could really do transactions even if the computer device you’re using is infested with malware and viruses, as long as you make sure that the coins are being sent to the right address.
- Less convenient – You need to plug in your hardware wallet to your computer to make a transaction; though fortunately the new Ledger Nano X has bluetooth functionality, giving you the option to send transactions using your mobile phone instead.
Some great hardware wallets
If there’s one thing that we want you to remember from this article, is the quote “not your keys, not your bitcoin“. The only way to have total control and to have significantly better security over your funds is to use a wallet that gives you access to your private keys/recovery seed. That way, even if for instance every single existing bitcoin/cryptocurrency exchange gets hacked, your coins will be left untouched.