How ChainUP Manages Risk In Cryptocurrency Exchanges ChainUP Follow Mar 12 · 5 min read

When it comes to finance or anything of value, keeping a system secure becomes a necessity. The risk of losing money is a major deterrent that can ultimately make or break a product. This is true both in the traditional finance world and the cryptocurrency exchange market, where its dated reputation as a wild west market can precede it for some. Especially in a busy cryptocurrency exchange market as seen today, security can be a major differentiator that places one exchange above its competitors.

Staying on top of security is difficult, which is why ChainUP provides a dedicated risk management solution that lets clients control various aspects of security on the platform. These solutions cover the entire ecosystem of cryptocurrency products and have helped ChainUP to build its reputation as a safe exchange platform.

Basics Of Exchange Risk Management

The most simple way to describe risk management is that it is a practice for reducing the threats to capital. From the perspective of an exchange, it refers to reducing the threats to the security of the platform in order to keep the users and their funds safe. A fundamental truth for any trading platform is that there will be people looking to break into the platform and take the funds for themselves.

When it comes to cryptocurrency exchanges, that risk is higher. The market is still not regulated at the same level as other exchanges in the traditional finance world, and so people look to take advantage of that. Similarly, some cryptocurrencies are, for the most part, anonymous. This allows for an easy get away as the money will ultimately disappear after being transferred away.

There have been a number of high-profile cases of crypto exchanges suffering from ‘hacks’, losing millions in funds and leaving their users without recourse. Even some big names in the market have been caught out. This has left an unfortunate stain on the reputation of the market, and has likely slowed down the adoption of cryptocurrencies.

With these risks in mind, cryptocurrency exchanges must be built from the ground up to be secure. This way, it is possible for the users to be reassured and start using the platform. There are many ways for exchanges to uphold security. By following these best practices, it is possible to mitigate the risks and keep things running smoothly and securely.

However, note that it is called risk management rather than risk removal. While there can be many different, sophisticated processes in place, it is impossible to remove all risks entirely. Risk management reduces the risks significantly to make them more manageable.

Risk Management On ChainUP

Now that we’ve familiarized ourselves with the standards of risk management in the crypto industry, let’s take a look at how they are implemented in ChainUP’s line up of blockchain solutions. Its professional, multi-dimensional approach to risk management allows for coverage of everything across the business, finance, wallet and exchange system branches.

Precautionary methods have also been put into place to ensure that security can be maintained from the beginning. An example of this is the prediction system that analyzes all users, both in the frontend and backend, to pick up on any nefarious behavior.

Similarly, it is possible to track patterns of user behavior in terms of login practices and trading, so when something out of the ordinary for that particular user occurs, additional security measures can be performed. This allows for real-time monitoring and for proactive measures to be taken to protect the users and the exchange as a whole. This includes monitoring of the exchange wallets so that fraudulent transactions can be prevented.

An audit is a mandatory part of the process when setting up the exchange. This consists of an audit of the smart contract and platform code. The professional audit reports are issued by a trusted third-party institution.

The platform has been designed to prevent malpractice by segregating and maintaining separate authorization requirements across each of the individual systems. This means the database, code, and backend are all protected and only those with the right credentials can get access to either on the systems. One benefit of this is that it makes any intrusions easily traceable. This also greatly reduces the chance of any malpractice while allowing for more control. The same can be said for the tamper-proof records of information relating to the business.

ChainUP recently announced its partnership with Amazon’s AWS to widen the reach of its SMS and email services in over 200 countries worldwide. What this means for customers in these regions is the ability to receive multi-factor authentication (MFA) or one time passwords (OTP) services through SMS. It is often said that the weakest link in the chain of security is the login process, so the ability to reduce the risk of accounts being hijacked through these authentication means can be a massive boost to overall security.

Why ChainUP Is The Top Choice

As you can see, ChainUP takes security seriously, and so provides a whole host of risk management capabilities for different areas of the business. Services such as code audits and big data analysis helps to find any patterns or other causes of concern that pose a risk to stop them before they cause issues. Then there are the malpractice protections in place where the platform enforces authorization across segregated systems.

While this is far from an exhaustive list of all risk management capabilities of the platform, it does go to show the many ways that ChainUP enable the creation of sophisticated security systems that keep the end users safe. It is for this reason that ChainUP has not faced any security incidents in its first two years of operation. To keep this record going, it will continue to focus on the security aspect of its cryptocurrency exchange solution. All in all, ChainUP has built an all around safe and secure product for cryptocurrency exchanges to use.

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