We are all familiar with the fact that the crypto the world is constantly evolving and transforming the landscape of businesses. Especially, cryptocurrency exchanges are the main driving force that is bringing in the maximum potential, profit, traction and increasing the volume of entrepreneurs and traders around the cryptosphere. With the demand and popularity drastically growing, investors are spoilt with too many choices and are overwhelmed with choosing the right platform to pitch in their valuable time and money.
Also, some of them are still skeptical about investing in a crypto exchange because of the hack threats revolving around them. So, if you are an aspiring crypto exchange owner, the key to stand out and shine from your competitors, sustain your business for a long time, and earn potential investors’ trust is executing rigorous crypto exchange security testing.
This blog is to enlighten you about everything you need to know about crypto exchange security testing to prevent fraud and hack threats for your crypto exchange software and ensure yourself a hassle-free business experience. If you are yet to get started with your exchange and is a novice entrepreneur in the field, let’s begin with understanding the different types of crypto exchanges.
Different types of cryptocurrency exchanges
- Centralized exchanges- Centralized exchanges are platforms that are maintained and controlled by a central authority. The users are dependent upon the central authority to manage the trading activities in the platform and their funds. The main advantage here is that customers can easily recover a lost password or their two-factor authentication information because the central authority would have full access to the exchange. Users can just show a valid ID such as a passport and recover their password.
- Decentralized exchanges- A decentralized exchange or DEX works contrarily to a centralized exchange. It eliminates the involvement of a third party and facilitates direct transactions between the users via a blockchain-based distributed ledger system. Decentralized exchanges are slowly gaining popularity among potential investors due to the enhanced efficiency, user privacy, transparency, and other benefits it offers.
- Hybrid exchanges- Hybrid exchanges are a combination of both centralized and decentralized exchanges. They comprise the functionalities and liquidity of centralized exchanges, also confidentiality and security of decentralized exchanges. They are more of an enhanced version of both the exchanges combined.
- P2P crypto exchange- A Peer to peer exchange is the perfect example of a decentralized exchange that facilitates direct global transactions between users without involvement from a third party. The transactions are more efficient, secure, speedy, and seamless on this platform.
What are the key areas of security testing and protection in a crypto exchange software?
- Attestation of users
It is important you need to ensure your exchange software is protected from DoS( Denial of Service) and DDoS( Distributed Denial of Service) attacks. And you need to make sure the transaction information and user data information is protected, users’ login information is not saved, and their password or email cannot be hacked. So, here, what you need to test is the following,
- Users Registration
- Users Login
- Probability of Users password recovery
- Management of login, logout sessions
- Verification of Users
Next step is to ensure that the users of your exchange are properly verified and are provided access to only a particular set of actions. For that, you need to reassure the following,
- Users’ uploaded KYC documents
- Through verification of documents and approval
- Setting clear access limitations for the users
- Constant check on the alterations made in the users’ profile
Your platform users must be able to make any alterations in their profile in a safe and secure way such as their email information, phone numbers, passwords, KYC documents etc. You need to keep a track of the changes being made, and ensure that it is being made safely and the users’ login, profile information, passwords, and private keys are completely safeguarded.
Verifying the transactions is perhaps the most important thing to do, as the whole business revolves around them for both users and the platform owner. You must constantly keep an eye on the crypto assets being deposited/withdrawn between user wallets/accounts. And you need to make sure the transactions take place in a secure manner and encrypted end-to-end with strong security codes. So, constantly analyze,
- The cryptos being deposited in the exchange
- The cryptos being withdrawn from the exchange
- Cryptos being transferred between users
- User wallet protection
- Smooth execution of Trades
You need to meticulously test your trading tools integrated in the exchange for smooth and glitch-free functionality, and to enable quick, efficient and effective execution of transactions.
- Third-party applications or APIs
You need to thoroughly test and verify your exchange’s different algorithmic models, price displays, and execution of orders manually or through an algorithm. Also, you need to make sure your API and third-party applications are completely safeguarded from any vulnerabilities for smooth operations.
- Blockchain Implementation
This is a very crucial step that you need to give sheer importance to. The whole functionality of your exchange is backed by this therefore, you need to ensure your crypto exchange software is integrated with the right blockchain, strongly encrypted with cryptography, and is safe from any vulnerabilities to ensure a safe, secure and seamless business environment for users and the exchange.
In short, here are the list of things you need to be testing before making your exchange live,
- Test the smooth registration process for users.
- Test users login procedures
- Give forget password and test password change procedures
- Test the request without login option
- Test fund deposit and withdrawal procedures and user wallet protection
- Test order types, placement( opening, closing orders), execution, etc
- Test trading tools, liquidity, market makers, trading BOT if integrated, etc
- Test Blockchain technology implementation
- Test user profile alterations such as email, name, verification ID, etc
- Test KYC procedures, uploading documents, verification, deleting documents
- Test Third-party API
- Test restricted user access
- Test compatibility with web, mobile, and every operating system
- Test 2FA procedure
- Test smooth customization integration
These are the basics you need to know about why to test your crypto exchange security, and what are the factors to check, or areas with possible vulnerabilities to check in your exchange. There is so much more information you need to know about security testing of your exchange. But to be precise, if you are looking for launching your own exchange, and you are a novice entrepreneur, the best way to go about it is to hire a well-experienced company and acquire comprehensive crypto exchange software solutions. Such companies will provide all-inclusive services from the development of your exchange, design, marketing, testing and deployment. Therefore you can launch your exchange hassle-free, and focus on just the sales and customization part. But choosing the right company is very essential to achieve a bug-free, risk-free and profit-yielding exchange. Thus, all you have to do is conduct extensive research, identify the right cryptocurrency exchange development company, and launch a safe, secure, and successful exchange most efficiently and effectively to become a key player in the market!
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