There are hundreds of different cryptocurrency exchanges out there and Bitstamp is one of the largest of them. It trades in the top five cryptocurrencies with a 24-hour trading volume just under 80 million US dollars. If you're thinking about trading on Bitstamp, you're probably asking yourself “Is Bitstamp Safe?” In a nutshell, Bitstamp offers one of the safest trading experiences possible. But let's take a deeper look.
How long has Bitstamp been around?
Bitstamp announces itself as “the world's longest-standing crypto exchange”. It was founded in 2011 based in Slovenia. The founders moved the registration to the UK in 2013 and later to Luxembourg in 2016.
Is Bitstamp Regulated?
When the founders moved Bitstamp to the UK they asked for guidance regarding regulation. They were informed that bitcoin wasn't classified as a currency, so they wouldn't be subject to regulation. The company then decided that Bitstamp would regulate itself.
After a few years of self-regulation, Bitstamp was granted a full regulation license by the government of Luxembourg in 2016. Since then, Bitstamp is regulated and permitted to operate in all EU member countries.
How safe is Bitstamp?
Bitstamp has had some hacking issues in the past. They were victims of a DDoS attack in 2014 and were hacked in 2015 when about 19,000 bitcoins were stolen. Both times the company managed to recover and they have improved security protocols several times.
Currently, security is accomplished by several different practices. First, almost all tokens are now stored in offline cold wallets, so even if the platform was compromised, most funds remain out of reach. Bitstamp only maintains enough liquid tokens to allow fast, efficient trading.
Second, Bitstamp requires its users to set up two-factor authentication immediately after registration. This two-factor authentication (or 2FA) can be set up via authentication apps like Google Authenticator or Authy. These apps generate random six-digit passwords which are only valid for one minute. 2FA passwords are required for signing in and for all trades and withdrawals.
As an additional security feature, Bitstamp uses PGP signatures to encrypt all personal information provided by its users. Considering they ask for more personal information during account verification than other exchanges, this is certainly a good thing.
Is Bitstamp trustworthy?
While Bitstamp has been hacked, users have not lost money. All of the 19,000 bitcoins stolen in 2015 were refunded to users and continues to insure all funds.
So far, there have been no reports on the misuse of personal information by Bitstamp.
All in all, Bitstamp is as trustworthy as they come. You should have no problems with buying, selling, or transferring coins in and out of Bitstamp.
How are Bitstamp accounts verified?
Bitstamp account verification is necessary to enable all trading options. You will be asked to verify your account immediately upon registering.
Bitstamp requires more personal information than other exchanges. You will need to provide basic financial information, scans of a personal identification document and proof of residence.
While some users find the verification process too intrusive, Bitstamp states that it's necessary to guarantee the safety and is a part of their anti-money-laundering policy. There have been no reports or lawsuits against Bitstamp for misuse of personal information, so they seem trustworthy enough.
Are Bitstamp Wallets safe?
Wallets on Bitstamp are safe, but the extent of said safety ultimately depends on each user. If users choose a safe password and keep 2FA enabled, wallets will stay safe.
However, users don't receive the private keys to their wallets. This means that technically speaking, users don't own their wallets. This is the norm for crypto exchanges, which is why it is recommended to users on any exchange not keep large amounts of tokens on their exchange wallets for extended periods.
After looking at all this, we can see why the answer to the question “Is Bitstamp safe” is yes. It's completely safe.
How to get started on Bitstamp
Registering an account on Bitstamp is quite simple. Let's assume you are creating a personal account.
- First, head over to the Bitstamp home page and click on the “Register” button in the top right:
- Select the type of account you are creating: personal or corporate. Click on “Personal account”.
- Enter your first name, last name, email address, accept the terms and conditions and click “Continue”. An email will be sent to the address you provided.
- Open your email inbox and click on the link to activate your account.
- Type and confirm a secure password for your account and click “Continue”.
- On the next screen, you will see the user ID Bitstamp has created for you. This is the ID you will use every time you log in. You will also be asked to start the user verification process. Click “Start your verification”.
- Provide your basic personal information: Country of residence, address, and postal code. Confirm you hold nationality in your country and click “Continue”.
- You must now enter your phone number. After clicking “Continue”, Bitstamp will text you a code you must enter on the next screen.
- Now you will have to input basic financial information. It's just your current occupation and how much your yearly estimated deposit into Bitstamp will be. Fill in this information and click “Continue”
- On this screen, you must provide some more financial information. You need to state what you will use Bitstamp for and whether you intend to deposit crypto from other sources into Bitstamp.
- Finally, you must upload a proof of residence document. The address on this document must match the address you entered earlier.
- After uploading the document Bitstamp will ask you to enable 2FA via authenticator apps like Authy or Google Authenticator. Follow the instructions to set up your 2FA.
- After setting up 2FA you just have to wait for Bitstamp to complete verification to have full access to all options on the site. You will receive an email once verification is complete.
That's it. You now have a verified Bitstamp account and can begin trading. How to do the actual trading is beyond the scope of this article, but since Bitstamp's user interface is pretty simple, even newcomers should get the hang of it fairly soon.
When you first started reading this article you were asking yourself “Is Bitstamp safe?”. Hopefully, that question has been answered here. Following the steps above you will be able to open your account and begin trading. If there is one downside to Bitstamp is the extremely limited selection of currencies they list: only Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash. Experienced traders will soon be looking for other exchanges, but new traders should be able to do just fine.
In conclusion, Bitstamp offers a fast and overall safe and secure platform for trading cryptocurrencies. It's been around for quite a few years and is expected to be sticking around for quite some time.