The Exchanges Review Part II: In and Out, Securely

Further to the first part of our review of ten exchanges, CoinTelegraph turns its attention to safety and the transaction process to give a slick overview of each one’s pros and cons.

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The Exchanges Review Part II: In and Out, Securely
An important consideration for anyone using cryptocurrencies is the ease of buying and selling them, while safe in the knowledge that the chosen exchange is reputable and trustworthy.

Further to the first part of our review of ten exchanges, CoinTelegraph turns its attention to safety and the transaction process to give a slick overview of each one’s pros and cons.

Not so hot

Cryptsy lands bottom of the ten exchanges under review both in terms of transacting and safety. Its slow loading and unstable interface among other issues have resulted in many user reports of deposits taking a suspiciously long time or going missing altogether. This possibly accounts for Cryptsy having the lowest volume of the ten exchanges (more information on volumes coming later).

However, the exchange does have a registered address and holding company based in Florida, Project Investors Inc., making traceability easy.

Management: 5
Compliance/ security: 2
Efficiency: 2
Withdrawal/ deposit types: 2

ICBIT is also under constant scrutiny regarding its safety record. While it is currently in the process of incorporating offshore jurisdiction, there are numerous sources online which voice concern over lack of accountability in the event of fraud or technical failure.

That said, however, processing is done in conjunction with DeepBit, the largest Bitcoin mining pool, which nonetheless offers some sort of peace of mind, although safety in numbers is not a feature which has applied to the Bitcoin space, as has been seen.

Management: 1
Compliance/ security: 2
Efficiency: 3
Withdrawal/ deposit types: 3

Aside from an address in China, LakeBTC is also an elusive entity in terms of accountability offline. There have also been many calls on forums for representatives to divulge further details about the exchange and make core information more accessible. It does however offer fairly comprehensive security, including SMS confirmations of withdrawals.

Management: 3
Compliance/ security: 2
Efficiency: 3
Withdrawal/ deposit types: 3

BTC-e is perhaps the most unfriendly to non-Russian speaking users, however. While it offers a good selection of deposit and withdrawal options, the site’s legislation is only available in Russian and users have reported suspicious errors in addition to much-publicised fraudulent activity such as selective account freezing. It is also unknown who controls or owns the site.

Management: 1
Compliance/ security: 2
Efficiency: 4
Withdrawal/ deposit types: 4

Bitfinex fares considerably better than the others mentioned thus far, but as theblogchain’s review also points out, there is mistrust regarding the site’s programming. The platform is owned and operated by iFinex Inc. (Bvi), and during this final phase the platform is being prepared to operate as a fully licensed model.

The registered address is located in Hong Kong, which like China is also the subject of scrutiny as authorities are known to be keeping a close watch on Bitcoin’s development.

Management: 4
Compliance/ security: 4
Efficiency: 3
Withdrawal/ deposit types: 2



A Security flipside

In terms of safety, there is a noticeable cut-off between two groups of exchanges. Those which follow are all basically reliable, and have not demonstrated sustained security flaws.

BTC China is legally situated in Shanghai and is the biggest name in Chinese Bitcoin. In light of pressure by the People’s Bank of China, fiat withdrawals are not possible, but the site does offer some impressive features, such as the BTCChina Voucher, a unique security tool.

BTCC Voucher’s escrow function allows you to trade the BTCC Vouchers safely and securely with others. The seller gives the buyer a 2-part voucher code, the buyer then pays the seller, and BTC China will hold the funds in escrow until the seller confirms receipt of payment before releasing the funds. This will protect both the buyer and the seller.

Management: 5
Compliance/ security: 4
Efficiency: 3
Withdrawal/ deposit types: 2

Hitbtc has also maintained security with as yet no major issues, but the exchange is still relatively young.

Its ‘Recent Activity’ chart feature, displayed at the bottom of the settings page, notifies users if someone is attempting to access or has accessed their account maliciously. Verification is built into the withdrawal process.

Their website provides enough information to satisfy basic questions of validity (albeit not enough to let you learn who they are) and Google Authenticator can be used for two-step verification. It has a registered address in Tallinn, Estonia.

Management: 3
Compliance/ security: 4
Efficiency: 4
Withdrawal/ deposit types: 2

ANXBTC offers support for Hong Kong Australian dollars from its registered location in Hong Kong under CEO Ken Lo. It is approved for foreign exchange as a Money Services Operator (MSO) with a license issued by the Hong Kong Customs and Excise Department Physical intrusion.

Security appears to be truly paramount in the operation, given, as stated on its website, “the exhaustive vetting and background checking of staff members, the cold storage of coins, manual (yet efficient) processing of all withdrawal requests, and dedicated awareness to recurring security threats such as social engineering, phishing, and remote zero day exploits” among others.

Management: 5
Compliance/ security: 4
Efficiency: 4
Withdrawal/ deposit types: 4

Kraken is also a pioneer in security features and is the only exchange to offer PGP-encrypted emails to customers. As it is owned by Payward operating out of San Francisco, risk of dubious activity is minimal.

Separately, it passed a public, cryptographically verified Proof-of-Reserves Audit, more details of which can be found here.

Management: 5
Compliance/ security: 5
Efficiency: 4
Withdrawal/ deposit types: 4

For maximal support and functionality, however, CoinTelegraph found Bitstamp to have struck the perfect balance. Occasional delays in withdrawal requests were responded to swiftly on forums by staff and resolved thereafter.

Its partnership with Coinbase allows for a de facto guarantee of legitimacy, with Bitstamp CEO Nejc Kodrič, who co-founded the company in 2011 with Damijan Merlak, a well-known member of the community. The exchange is a UK limited company with a registered address, so is entirely traceable.

Management: 5
Compliance/ security: 5
Efficiency: 3
Withdrawal/ deposit types: 3

It is of course through word of mouth that the most secure options for Bitcoin investors are made known, and there is at this point little investigation required on the part of users. However, in light of Mt. Gox, there is always a chance that all is not what it seems, and so caution and checking of community posts remain the best policy when using any service.
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