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Date: 2024-04-22

With 2FA Enabled, Are Exchanges Safe?

2FA - 2 Factor Authentication - is a system designed and implemented by a large number of "Internet" based companies (such as Google) in order to better validate users who sign up to their systems.

The point of it is that if you have a smartphone, or some other means of communication, that is independent to your computer, the company can use a third-party provider to send you some other form of "password" that you can use to verify your account.

The most common form of 2FA is a phone. When you register and login, the company will send another "password" to your phone (typically a 4 or 6 digit code) which you need to type into the service when you login. Correctly typing this into the system will essentially ensure the company that you are the legitimate owner of the account.

Whilst phones can be hacked, the 2FA method is one of the most secure & universally-adaptable in the world today. It's used by a large number of companies, especially of the highest level in the market, to provide an effective means of verification for the billions of Internet users.

This tutorial looks to examine how effectively the 2 factor authentication ensures particular services are secured...

2FA Explained Properly

Whenever you register for a web service, your "user" details are stored in a database.

These include your login information (typically an email) and a bunch of other information (perhaps your name etc). Included in that information is going to be your password (which is encrypted with a one-way hashing algorithm called MD5).

Whilst this is secure, it means that if a user's password is compromised, or they have some sort of other problem with their system, it could lead to their entire web profile getting hacked. To battle against this, various Internet companies introduced the "2 Factor" method to ensure that you're able to verify yourself.

The point with 2FA is that it gives the company the opportunity to verify who you are without actually having to go through the whole process of using some obscure system. This not only means that you're in a much stronger position to get the most out of the system, but your details will be protected.

Ultimately, 2FA is becoming even more commonplace, especially as governments have begun to utilize it. This means that if you're looking at getting the system to work properly, you're able to feel protected.

Use On Exchanges

The use of 2FA in the various "exchanges" was welcomed by the "crypto" community, as it allowed the users to basically provide an effective way to protect their accounts.

The notorious nature of "crypto" exchanges - both through their propensity to be hacked, and the way in which they've been created to provide users with an underlying way to provide the most effective way to trade the various crypto "coins", has made it essential to protect the user information.

The other reason why they're used is because exchanges are actually typically somewhat regulated (meaning they are governed by a number of protocols that apply to banks - most specifically the "Know Your Customer" protocol). KYC is used to verify people who are transacting money with a bank, and it's a vital element of the financial services industry.

Any "exchange" worth its salt basically allows people to register ONLY if they are able to verify their identity. 2FA plays a large part in this...