What Is Binance and Are Your Crypto Holdings Safe There? – MakeUseOf

Binance is the biggest crypto exchange in the world in terms of trade volume. Its current daily trade volume is valued at approximately $30 billion. Among the key drivers of its growth over the years has been its widely attested reliable security and extensive product portfolio. The exchange supports trading of over 300 altcoins and has more than 1,000 crypto trading pairs.

The Binance Product Portfolio

Founded in 2017 by Chinese-Canadian businessman Changpeng Zhao, the company which is based in Ta’ Xbiex, Malta, offers numerous crypto-centric services. The following is an outline of Binance’s legacy products.

Trading Platforms

Binance currently runs three main trading platforms. They are Binance.com (the main service for international clients), Binance US (for US users), and Binance DEX. While Binance.com and Binance US hold assets on behalf of clients and strictly follow regulatory statutes, Binance DEX is designed differently.

The DEX platform is a decentralized exchange that allows users to trade independently and directly with other traders. It also has no Know Your Customer (KYC) or Anti Money Laundering (AML) processes whatsoever, and users are responsible for their cryptocurrency wallet keys.

While Binance US primarily caters to US clients, Binance.com and Binance DEX are closed to American citizens. That said, the three sites collectively prohibit users from 28 nations from accessing Binance services due to trade restrictions. The Binance list of blocked countries currently includes Albania, Democratic People’s Republic of Korea, Cuba, Iran, Iraq, Somalia, Sudan, Syria, Venezuela, and Zimbabwe.

Binance Coin

Binance Coin (BNB) is Binance’s native cryptocurrency and is underpinned by the Binance Chain blockchain system. BNB is used in the Binance ecosystem as an investment coin. It is also popularly used by Binance clients to pay trading fees on its platforms due to its discounted rates which help to increase its use cases.

The cryptocurrency is presently accepted by over 40 million merchants worldwide. This extensive reach has been amped by the Binance Card which only allows payments using Bitcoin and BNB coin. Holders need to transfer their crypto assets to the card in order to make online payments.

The Binance Smart Chain

The Binance Smart Chain (BSC) is an auxiliary blockchain system that runs parallel to the Binance Chain and supports the decentralized applications (dApp) ecosystem. It allows the creation of smart contracts on the blockchain and supports staking projects.

Launched in April 2020, it has gained significant popularity within the decentralized finance (DeFi) community due to its scaling capacity, low fees, and cross-chain compatibility. DeFi projects are blockchain-based peer-to-peer financial services that allow users to lend, borrow, and invest money. They typically have no centralized control and are viewed by crypto enthusiasts as a means to effectively bypass traditional banking institutions.

The latest notable DeFi projects that rely on the BSC system include Harvest Finance, Value DeFi, and PancakeSwap. BSC also hosts NFT projects such as the BakerySwap marketplace and the Battle Pets gaming NFT.

Is Binance Safe?

Image indicating fingerprint unlock feature.

It is important to note that all cryptocurrency platforms, like all other online resources, are susceptible to hack attacks, whether directly or indirectly. Of course, some platforms are more susceptible than others.

When it comes to Binance, its platforms have scored highly in cybersecurity ratings. According to the most recent report by the Xiamen SlowMist Technology security firm, Binance has extensive security measures in place that supersede many in the crypto world. Its current rating by the firm is “Excellent.” The structures analyzed by the firm include server security, wallet, and private key security, and software integrity.

How to Secure Your Binance Account

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To ensure that your funds on Binance are safe, it is best to follow standard security protocols. The following is an outline of some top measures.

1. Create a Strong Password

Creating a strong password is the first step in securing your Binance account. Typically, a strong password consists of a mix of lower case and uppercase letters, symbols, and numbers, and is usually more than eight characters in length.

While creating the password, it is important not to reuse passwords used on other platforms. This is because a breach on a different network could lead to the credentials being intercepted and used by hackers to unlock accounts on financial platforms such as Binance.

Easy-to-guess passwords should also be avoided. This is because they are easily deciphered using brute-force password cracking tools.

Password managers come in handy when trying to create unassailable passwords. Some of the best password managers include Google Password Manager, LastPass, and Dashlane.

2. Use Two-Factor Authentication (2FA)

Image of Binance 2FA option symbols.

Binance allows users to enhance account security through the use of two-factor authentication. Clients have a choice of three authentication modes, and they are via SMS, Google Authenticator, and Yubikey.

Two-factor authentication via SMS allows users to verify their account credentials via an SMS code sent to their phone number. When it comes to Google Authenticator, a barcode scan is needed in order to establish an initial connection between the Binance account and the app. Once this is done, the app will generate a random unlock code each time the user wants to log in.

Securing the account using the authenticator app is widely considered safer than using SMS verification. This is because SMS authentication can be bypassed through SIM-swapping. The security feature is also vulnerable to SS7 network interception techniques.

Besides SMS and Google Authenticator, Binance clients also have the option of securing their accounts using YubiKey. All a user has to do is connect and verify their Yubikey on the platform.

After this, the key can be plugged into the computer USB-port to validate the account each time the owner wants to log in. The hardware-based authenticator primarily relies on Near-Field Communication (NFC) cryptographic technology to validate accounts.

3. Limit Binance Withdrawal Addresses

Binance provides users with the option to only withdraw their assets through specific accounts. The feature, which is referred to as Address Management, uses a whitelist to allow withdrawals. Each address that’s added requires an email confirmation. For this reason, it is also best to also ensure email security by enabling two-factor authentication on the linked email address.

Enabling this safeguard prevents arbitrary withdrawals via accounts which could be controlled by hackers.

Binance Is Largely Unregulated

While you work to secure your Binance account, it is important to note that the platform is largely unregulated. What this means is that in the event of a loss of assets due to a breach or related attacks, there are no guarantees for users to get compensation, especially if the loss occurs due to the customer’s negligence.

The platform, however, has a Secure Asset Fund (SAFU) fund that serves as an emergency fund to be used in the event of a breach. Binance typically allocates 10 percent of all trading fees to the fund whose assets are kept in cold storage.

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About The Author

Samuel Gush (7 Articles Published)

Samuel Gush is a tech writer at MakeUseOf. For any enquiries you can contact him via email at gushsamuel@yahoo.com.

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