Many people enjoy trading crypto because it can be exciting and stressful due to market movements. However, it is important for a crypto exchange to have strong security measures in place to protect assets from hackers and fraudsters, as the industry suffered over $3 billion in losses in 2022. To stay ahead, a top-level crypto platform must continuously improve their security with cutting edge technology.
Crypto Hot Wallet vs. Cold Wallet
Basically, the purpose of a crypto wallet is to safely store public and private keys for cryptocurrency transactions. The two biggest categories of crypto wallet are hot wallet and cold wallet. “Hot” simply means that the wallet is connected to the internet. Hot wallets enable the user to approve and execute transactions faster but are typically more vulnerable to online hacks. On the other hand, cold wallets are not connected to the internet, so they sacrifice convenience for a higher degree of security.
Secure and Transparent Crypto Wallet System
To grant their users transparency and peace of mind, Phemex has implemented a highly secure crypto wallet infrastructure. Cold wallets offer stronger protection, so Phemex uses a proprietary Hierarchical Deterministic Cold Wallet System that assigns separate deposit wallet addresses to each individual user. These deposits are aggregated and stored in separate multi-signature cold wallets through offline signatures. To achieve top-notch transparency, the exchange has even made some of these cold wallet addresses public so that anyone can check the platform’s asset funds in reserve. Withdrawals too are treated with the utmost scrutiny, with an automatic risk control system flagging suspicious requests in real-time and having them be reviewed again manually by internal staff.
Besides, a sophisticated combination of network firewalls reduces vulnerabilities to bad actors. The platform’s proprietary trading engines are custom designed to achieve high velocity and total availability, with multiple backups being simultaneously run at all times. This holistic approach toward crypto safeguarding has elevated Phemex to becoming a paragon of security amongst CEXes. While even major exchanges like Binance, Crypto.com, and KuCoin have suffered malicious attacks, Phemex has never been hacked.