Is Bitstamp Safe?
If you’re reading this guide, it means you’re either trading cryptocurrencies already, or you’re thinking about getting involved.
You’re either looking for a suitable crypto platform which is why you’re browsing through our exchange reviews, or you’ve set your mind on choosing Bitstamp and look for more information on its features and performance.
Either way, we have what you’re looking for!
A useful strategy when deciding on a crypto exchange is to look at both its platform and account security features. This guide will focus on exactly that – in relation to Bitstamp. By the end of the text, you’ll know whether or not to give this platform a try.
Let’s get started!
Bitstamp is one of the oldest cryptocurrency exchanges that still exist on the market. It was launched in 2011, co-founded by Nejc Kodrich and Damian Merlak, and initially located in their homeland Slovenia.
Two years later, the company relocated to London, UK. Unfortunately, the UK crypto market didn’t fulfill the expectations of Bitstamp’s founders due to the lack of crypto guidelines and regulations. This was a problem because if there aren’t any rules you adhere to, clients tend to think you’re doing something risky or illegal.
In 2016, Bitstamp finally settled in Luxembourg, a crypto-friendly and crypto-regulated country. It started collaborating with renowned financial institutions like Crédit Agricole, Swissquote, and the Chicago Mercantile Exchange and these partnerships helped Bitstamp attract even more customers.
Bitstamps supports several prominent cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. You can purchase them with crypto or with fiat currencies (USD and EUR). The deposits can be made via a bank account or credit/debit card. When it comes to trading fees, Bitstamp looks at the traders’ volume to adjust them.
At the time when Bitstamp was still located in the UK, the platform experienced a serious hacking attack. The exchange’s operational “hot” wallets were compromised and around 19,000 BTC were stolen. Bitstamp immediately notified its customers that their accounts and balances will be frozen and they won’t be able to make any withdrawals to their linked wallet addresses.
In order to conduct their investigation, solve the problem, and avoid future security breaches, the exchange had to be shut down temporarily during which time the team worked on designing a stronger and more sophisticated infrastructure.
Luckily, the theft didn’t affect Bitstamp’s cold storage where the platform keeps the majority of customers’ and operational funds. Since then, there have been no reports of fraudulent activities. Customer funds are still stored in closely monitored cold storage where any action requires multiple signatures to be approved, plus all sensitive data is encrypted with PGP signatures.
Relocating Bitstamp to Luxembourg was a major milestone for the exchange and its reputation in the crypto world. By registering with the country’s financial authorities and complying with their AML and KYC policies, Bitstamp became the world’s first nationally licensed crypto exchange. Not only in Luxembourg but in the rest of the EU countries as well.
Bitstamp didn’t stop here. During the next couple of years, the exchange was busy developing its American subsidiary and taking all steps necessary to obtain an operating license there as well. In April 2019, the New York State Department of Financial Services (DFS) approved the application of Bitstamp USA Inc. for a virtual currency license.
The media coverage of this event put the exchange in the spotlight and helped popularize Bitstamp among US traders.
The two-factor authentication method or simply 2FA is an additional layer of protection that crypto exchanges (and other online platforms) offer to their users. Most of the time it’s an optional feature that users can activate either upon registering for an account or later on by going to Account Settings.
The 2FA on Bitstamp requires a password and a 6 digit code from the user before letting him/her access the account. The password is chosen by the user him/herself, whereas the code is generated by an authenticator app.
Bitstamp supports Google Authenticator and DUO which both generate one-time passcodes that last from 30-60 seconds. You need a new code for each login.
Withdrawal Address Whitelisting
Bitstamp allows users to create their list of addresses that are approved to make withdrawals from the account. This feature ensures that anytime an unknown or unauthorized address tries to log into your account, you’ll be notified via email.
When you add an address to the whitelist, it usually takes 3-7 days for your request to be approved.
Similarly, to enhance the security on your profile, Bitstamp includes the withdrawal email confirmation feature and automatically activates it for all newly-registered accounts.
In October 2019, Bitstamp announced it will be integrating Ledger Vault’s technology as part of its custody system. This is a major step forward for the exchange, as this technology will allow Bitstamp to have control over its cryptocurrencies without compromising on liquidity.
In collaboration with the Ledger Vault, the exchange will use Hardware Security Modules and Personal Security Devices for storing crypto assets. Moreover, the company will help Bitstamp govern the funds and distribute the duties evenly among its team.
As the longest-standing crypto exchange in the world, Bitstamp has come a long way in recent years. If we look past the initial shortcomings, such as the 2015 security breach that the platform was able to solve promptly, transparently, and efficiently, Bitstamp has had a spotless record ever since.
We’re talking about a fully-fledged licensed platform that complies with financial regulations and takes great care to protect customer information and funds. We’re talking about state-of-the-art custody hardware, account security, login alerts, whitelists, etc.
Even today, Bitstamp remains one of the top five crypto exchanges on the market.
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Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.