What can exchanges like Huobi Global do to help the cryptocurrency revolution live up to its full potential? For one thing, they can help ensure that clients feel safe – and, even more importantly, are safe from hackers, identity thieves, and other fraudsters.
Huobi spokesperson Ethan Ng addressed that very topic at the Vietnam Cryptocurrencies and Digital Assets Dialogue 2018 event this past weekend. “We are coming of age as an industry and evolving into true mainstream acceptance. In order facilitate this, we, as an industry, must make sure that the public feels secure – and even more importantly, that they are secure,” said Ng.
Though cryptocurrencies such as bitcoin are rapidly growing in popularity and acceptance, even recent history has shown that some elements of the industry are still susceptible to security related incidents. Just earlier this year, for example, the Japanese exchange Coincheck lost $500 million worth of client assets because they left them in a less-secure hot wallet.
In his speech, Ng suggested a number of industry standards for exchanges. Among them were:
- Dedicated user protection funds to compensate clients for losses incurred due to exchange security failures. Huobi, for example, maintains a 20,000 BTC Huobi Security Reserve fund as well as the Huobi User Protection Fund, which is funded by 20% of all HTs bought back by Huobi.
- Stringent wallet protection. Huobi stores 98% of its client funds in more-secure cold wallets, rather than less-secure hot wallets.
- Strong internal controls to prevent fraudulent coins from being listed on exchanges and to separate good projects from the bad. Huobi has pioneered this space via its SMARTChain evaluation model.
- A variety of measures to deter and prevent unauthorized users, including mandatory 2-factor authentication enabled for all clients.
- Robust cybersecurity protections to prevent criminal intrusions, including third-party penetration testing and a full-time security staff trained in bitcoin protocol, double spending, and transaction malleability.
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