Being in existence since 2011, Bitcoin’s really early days, if you’re been in the Bitcoin and cryptocurrency space for a while then Bitstamp would definitely be a very familiar name.
The question though is, after their previous security issues, is it safe to hold your coins on Bitstamp?
Table of contents:
- Is Bitstamp legit?
- Bitstamp’s Security
- Is Bitstamp Safe?
- Reasons why you should NOT leave your funds on Bitstamp
- Where do I keep my funds instead?
Is Bitstamp legit?
Bitstamp is a registered business with their own physical office located in the United States and the United Kingdom. We can confidently say that Bitstamp is a totally legitimate business.
Bitstamp’s Security
We really can’t say how secure Bitstamp is right now because they might have hardened their security due to their previous problems throughout the years, but take note that Bitstamp has been hacked in the past (2015). Effectively losing $5 million worth of their user’s bitcoin.
Is Bitstamp Safe?
After Bitstamp got hacked in the past, it seems like they’ve been taking their security a lot seriously. But regardless, is it actually a good idea to leave your coins on Bitstamp, an exchange?
No. Regardless if Bitstamp got hacked in the past or not, leaving the majority of your funds that aren’t being traded on exchanges is almost never a good idea. If you’re more of an investor rather than a daytrader, withdraw your funds on a hardware wallet.
Reasons why you should NOT leave your funds on Bitstamp
Reason 1: Nothing is unhackable
Like said earlier, bitcoin and cryptocurrency exchanges have always been a very hot target for hackers, as hackers could potentially get away with millions and billions of dollars worth of coins if they ever successfully cracked an exchange’s security. Which, hackers have successfully hacked Bitstamp in the past.
Can Bitstamp get hacked again?
While it may or may not happen again, yes; it’s technically very very possible. Unfortunately, it’s just a simple fact that exchanges do get hacked a lot.
Reason 2: “Not your keys, not your bitcoin”
While this quote is directly referring to bitcoin, it should apply to pretty much every single cryptocurrency. Only use wallets whereas you have control over the private keys/recovery seed, as that way, even if the exchanges you use get hacked, your coins don’t get lost along with it.
Another reason is that one of the main selling points of bitcoin is that it’s unconfiscatable. When you leave your funds on centralized exchanges, it defeats that purpose. Exchanges, in general, can lock up your account(s) regardless if you did something wrong or not. A lot of people think that this easily fixed by simply submitting a support ticket to the exchange, but in some cases, it’s not. This occurrence has happened a lot more than most people think.
Reason 3: Exchanges are exchanges
Use exchanges for their sole purpose, as a platform to exchange your money for some bitcoin and other cryptocurrencies. Simply withdraw your funds after every transaction using exchanges like Bitstamp, the same reason why you wouldn’t leave your hard-earned money on money remittance centers and money exchangers. Instead, you simply withdraw the cash and lock them up in your personal safe, or you store them in your bank. The same thing should be done with bitcoin. Simply send them over to your personal wallet whereas you have control over the private keys.
Where do I keep my funds instead?
Mobile wallets(if you own small amounts of bitcoin)
Mobile wallets are wallets that, by it’s name alone, are wallets that are installed on your mobile phone. Mobile wallets are great simply because you have easy access to your funds with you at all times.
While Mobile wallets are great, we only suggest leaving funds on mobile wallets if your coins don’t cost that much. If you’re holding huge amounts of bitcoin or cryptocurrencies, we heavily suggest investing some money for a hardware wallet instead.
Why not desktop wallets? Especially if you’re using a Windows device, computer systems are a lot more prone to viruses compared to your phone. Malware and viruses that are mainly focused on trying to steal your coins are quite common nowadays. Losing your coins due to a malware/virus on your computer is one of the most common ways on how people lose their coins.
Advantages
- Convenient – if you want to transfer funds, you can simply scan the QR code of the recipient address using your phone
- Free – great mobile wallets are easily downloadable right now for free on the Android PlayStore and the iOS AppStore
Disadvantages
- Lack of security – while using a good mobile wallet is safer than using a custodial wallet, the security of mobile wallets may not be enough especially if you’re holding a significant amount of coins. While difficult and quite unlikely, mobile phones, in theory, can still be infected with malware and viruses. For people who hold a good amount of bitcoin and cryptocurrencies, we heavily suggest getting a hardware wallet.
Some great bitcoin mobile wallets
Hardware wallets(if you own significant amounts of bitcoin)
The Ledger Nano X
Hardware wallets are small devices made specifically for securely holding bitcoin and cryptocurrencies, and is small enough to fit in your pocket. We heavily suggest using a hardware wallet instead, if you’re holding a significant amount of bitcoin or cryptocurrencies. A hardware wallet is definitely your best choice for holding coins and tokens without fearing of getting hacked.
Advantages
- High security – your wallet’s private keys never leave the device. Hence, you could really do transactions even if the computer device you’re using is infested with malware and viruses, as long as you make sure that the coins are being sent to the right address.
Disadvantages
- Less convenient – You need to plug in your hardware wallet to your computer to make a transaction; though fortunately, the new Ledger Nano X has bluetooth functionality, giving you the option to send transactions using your mobile phone instead.
Some great hardware wallets
- Ledger Backup Pack (recommended)
- Ledger Nano X (recommended)
- Ledger Nano S
- Trezor Model T
- Trezor One
Must read: The Types of Bitcoin & Cryptocurrency Wallets
Conclusion
If there’s one thing that we want you to remember from this article, is the quote “not your keys, not your bitcoin”. The only way to have total control and to have significantly better security over your funds is to use a wallet that gives you access to your private keys/recovery seed. That way, even if for instance every single existing bitcoin/cryptocurrency exchange gets hacked, your coins will be untouched.
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