Know Your Exchange Safety
Exchanges can be a convenient way to sell or buy more Monero, but not all exchanges are created equal.
Here are a few things to keep in mind when it comes to keeping your XMR safe while using exchanges.
1. Do your own research before using any exchange. Attempt to answer these questions:
- Are there positive reviews available through third-party sources? Are they reliable?
- Has it ever been attacked? Was the response to the attack appropriate?
- How long has the exchange been in operation?
- Are the creators/managers known or reputable individuals or entities?
- Are you able to maintain your privacy by not sharing any personal information?
- Does the website use security precautions like captcha and Two-Factor Authentication (2FA)? Does it have legitimate security certificates and start with https://?
- If you plan on reporting taxes, does the exchange allow you to download reports for easy proof of buy/sell transactions?
2. Exchanges create their own wallets for you. You are not likely to have access to the exchange wallet’s mnemonic seed. If the exchange gets attacked or proves to be a scam, you may lose whatever XMR you have on the exchange’s wallet. A good rule of thumb is to only keep XMR on an exchange if you plan to use it soon. Otherwise, move it to a wallet that you control.
3. If you want to trade a significant amount of XMR over an exchange, consider testing the transaction by trading a smaller amount first. This test amount should be no higher than you would be comfortable losing.
4. With any XMR transaction, always double-check the send/receive wallet addresses to make sure they are correct. Even if you copy/paste the address, confirm it was pasted correctly, as there are known attacks that will change a cryptocurrency address when it is copy/pasted. If your device was somehow infected by that malware, a simple double-check to confirm it pasted properly is all you would need to protect your XMR.
5. As time goes on, decentralized exchanges will become more common. With Monero being a decentralized cryptocurrency, these exchanges are aligned with the ethos of Monero. Consider using them, but as always, do your research first!