Rewards Hub 
Many of us love crypto trading because it can be exhilarating and nerve-wracking. But these feelings should be caused by market movements, not because we’re concerned that the trading platform will accidentally lose our funds. The safeguarding of assets must be an impeccable pillar of operations for any crypto exchange. In 2022 the crypto industry suffered over $3 billion in losses to hackers and fraudsters. As security technology advances, so does the sophistication of bad actors, which means that any top-level crypto platform must constantly adapt with cutting edge crypto wallet security.
Crypto Hot Wallet vs. Cold Wallet
At a rudimentary level, the purpose of a crypto wallet is to safely store public and private keys for cryptocurrency transactions. They can come in many different forms such as a physical device or just a coded application, but the two biggest categories are hot wallet and cold wallet. A hot wallet simply means that the wallet is connected to the internet. Hot wallets enable the user to approve and execute transactions faster, but are typically more vulnerable to online hacks due to their connectivity. Metamask is a common example of a hot wallet.
On the other hand, a cold wallet is not connected to the internet so they offer a higher degree of security. In return for this increased protection, cold wallets sacrifice convenience because they must be manually connected to the internet and network in order to initiate any crypto transaction. For a more detailed breakdown, check out this Phemex blog article on crypto hot vs. cold wallet.
Centralized exchanges provide a custodial service for users to enhance the trading experience. These platforms are tasked with storing and operating with a vast sum of crypto assets, which is why both hot and cold wallets are used. The majority of funds are stored on the cold wallets due to greater security, while a portion is held on hot wallets for easier transaction flow.
Secure and Transparent Crypto Wallet System
In an effort to grant our users transparency and peace of mind, Phemex has implemented a highly secure crypto wallet infrastructure. Cold wallets offer stronger protection, so Phemex uses a proprietary Hierarchical Deterministic Cold Wallet System that assigns separate deposit wallet addresses to each individual user. These deposits are aggregated and stored in separate multi-signature cold wallets through offline signatures. To achieve top-notch transparency, the exchange has even made some of these cold wallet addresses public so that anyone can check the platform’s asset funds in reserve. Withdrawals too are treated with the utmost scrutiny, using an automatic risk control system to flag suspicious requests in real-time and reviewing them again manually.
Phemex’s wallet infrastructure isn’t the only security aspect worth noting. A sophisticated combination of network firewalls reduces vulnerabilities to both internal and external bad actors. The platform’s proprietary trading engines are custom designed to achieve high velocity and total availability, with multiple backups being simultaneously run at all times. They’ve allowed Phemex to essentially run 24×7 since launch without much issue. This proactive, exhaustive approach toward crypto safeguarding has elevated Phemex to becoming a paragon of security amongst CEXes. The proof is in the pudding. While even major exchanges like Binance, Crypto.com, and KuCoin have suffered malicious attacks, Phemex has never been hacked.
