<ol>
<li>Are the operators anonymous?  If so, this represents the highest possible risk.</li>
<li>How regularly does the exchange prove that it is solvent?  This is possible to do with cryptography.  If an exchange isn't doing it, its users should be asking why.</li>
<li>Is the exchange insured?  Having someone else's money on the line (and lots of it) can be a good way to help protect your own.  They might not let you behind the scenes as an individual but for an insurer to issue a contract, they will certainly be doing some due diligence.</li>
<li>The space is nascent enough and evolving so rapidly that trusted independent auditors (e.g. a Moody's, Fitch, or S&amp;P) have not yet emerged.  They will but until that time, the onus is on the individual to tread carefully.</li>
<li>Ask on IRC.  Go to freenode #bitcoin and ask.  You might be surprised at what you will learn.  A lot of folks who got goxxed could have avoided their fates by doing this.</li>
<li>Read this: <a href="https://bitcointalk.org/index.php?topic=576337" rel="nofollow">https://bitcointalk.org/index.php?topic=576337</a> (List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses) for some perspective.</li>
<li>Finally, I would recommend the following:
Hold some BTC yourself, if you feel technically capable of doing so.  Use cold storage best practices.  (Practice these procedures with trivial amounts until you feel comfortable).
<a href="https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet" rel="nofollow">https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet</a>
Partition the rest of your holdings across several trusted, publicly visible entities such as BlockChain.info, CoinBase, and Xapo.
Use email addresses to register that have multifactor authentication enabled (such as gmail) and then enable multifactor authentication on the sites themselves.  Use unique, strong passwords.</li>
</ol>

<p>If you do all of this, you will achieve a high level of security, distribute your risk, and you'll also learn a lot along the way.</p>

CC BY-SA 3.0
2014-05-09T01:35:07.297Z
2014-07-14T14:37:33.217Z
2014-07-14T14:37:33.217Z
CoinHeavy
<blockquote>
  <p>How can one gauge the reliability, customer service, and transparency of bitcoin exchanges?</p>
</blockquote>

<p>I totally agree that Bitcoin feels like the wild west, with people selling snake oil left and right.  It is early days, and that's how it works. If you want to be a pioneer, you will get arrows in your back. Right now, it's gambling, even more risky than gambling on the Stock Market.</p>

<p>If you're not comfortable with that, then wait. Down the road, there will be an influx of reputable exchanges. Right now, a "good" exchange won't make any more money than a fly-by-night exchange. But over time, the average reputation will increase.</p>

<p>The Internet worked the same way. Every Newspaper had an article on "Is the Internet a fad?" and warned "never use your credit card on the Internet". (Of course, kids these days don't even know what a newspaper is.)</p>

<blockquote>
  <p>How can one gauge the reliability, customer service, and transparency of <strong>Banks or Retailers?</strong></p>
</blockquote>

<p>Think of how many reputable retailers had their credit card database stolen in the last 6 months. Think of how many banks went out of business without warning in 2008.</p>

<p>People are reporting on bitcoin exchanges that loose a few million, but nobody reports when a grocery store goes under and looses a few million.</p>

CC BY-SA 3.0
2014-03-16T19:40:51.823Z
2014-03-16T19:40:51.823Z
BraveNewCurrency
<p>I think the best way to gauge exchanges is based on their structure, the information they provide to the public, and their overall features. Exchanges are not banks (yet), so there is no set regulations for them to follow especially if the exchange is located outside the USA. Is the exchange proactive about security and precautions-also if an incident occurs is there some point of contact for more information? Some exchanges don't even have a customer support service, so that would be the first thing to check for. Second does the exchange openly tell you about it's structure, provides all the conditions to usage and terms upfront? Someone in another answer mentioned AML policies and that's only one possible indicator. Last you want an exchange that has a good selection of coins, can hold your coins safely, is NOT at the risk of insolvency, has an interface that is intuitive, but provides enough information to perform the desired tasks. Cryptsy.com happens to meet all those conditions. I can only mention Cryptsy because thats the one I know the insides  of and can speak as an authority. </p>

CC BY-SA 3.0
2014-04-08T19:01:07.860Z
2014-04-08T19:01:07.860Z
Cryptsy_Brad
<p>Based on their compalince , KYC and AML policies.</p>

CC BY-SA 3.0
2014-01-22T05:48:14.510Z
Compliance is, them covering themselves from prosecution.
user
CC BY-SA 3.0
2014-01-21T23:37:28.250Z
2014-01-21T23:37:28.250Z
BTCXINDIA
<p>There are several exchanges for Bitcoin with a few highly respected ones like Mt.Gox, Bitstamp, bter, bit-e etc. I understand the reason why they require verification of users by supplying their bank information along with government ID and address proof. However, most of these exchanges decide to keep themselves anonymous to an extent. They don't mention the founding/management team on their website. I'm sure it's possible to find out for some by googling. I don't feel comfortable that they want all the information from me without disclosing anything about themselves.</p>

<p>This also raises the question about what level of security practices and audit do they have in place. I have read several stories about <em>hacking of exchanges</em>, <em>stolen databases/wallets</em>, <em>nightmare to withdraw</em> money etc. </p>

<p><strong>Is there a source of information that compares these exchanges in terms of real world incidents, fee structure, and the backing team behind them?</strong> Basically looking for a reliability and customer service rating.</p>

<p>Edit : After <a href="http://en.wikipedia.org/wiki/Mt._Gox#February_2014_hacking.2C_losses.2C_shutdown_and_bankruptcy" rel="nofollow">Mt Gox's</a> supposed failure, this question feels more relevant. I find myself fortunate that I avoided them. Especially since there were news about a large scale <a href="http://pando.com/2014/03/03/hackers-claim-to-have-breached-mt-gox-again-could-they-be-its-victims-best-hope/" rel="nofollow">customer data loss</a>.</p>

CC BY-SA 3.0
2014-01-21T14:23:02.557Z
This would be a nice to have but as you said, with very little audibility of their team and how they run their operation something like this essentially cant / would struggle to exist.
MaxSan
CC BY-SA 3.0
2014-01-21T23:45:42.357Z
I once wrote an [open letter to MtGox and Bitcoin Exchanges in general](http://blog.stevenroose.be/2013/05/an-open-letter-on-bitcoin-transparency.html). I believe MtGox replied it appreciated the feedback and would present it on their next management meeting. Nothing changed.
Steven Roose
<security><exchanges>
How can one gauge the reliability, customer service, and transparency of bitcoin exchanges?
user
# How can one gauge the reliability, customer service, and transparency of bitcoin exchanges?

(Asked by: username_0 on 2014-01-21)

There are several exchanges for Bitcoin with a few highly respected ones like Mt.Gox, Bitstamp, bter, bit-e etc. I understand the reason why they require verification of users by supplying their bank information along with government ID and address proof. However, most of these exchanges decide to keep themselves anonymous to an extent. They don't mention the founding/management team on their website. I'm sure it's possible to find out for some by googling. I don't feel comfortable that they want all the information from me without disclosing anything about themselves.

This also raises the question about what level of security practices and audit do they have in place. I have read several stories about *hacking of exchanges*, *stolen databases/wallets*, *nightmare to withdraw* money etc.

**Is there a source of information that compares these exchanges in terms of real world incidents, fee structure, and the backing team behind them?** Basically looking for a reliability and customer service rating.

Edit : After [Mt Gox's](http://en.wikipedia.org/wiki/Mt._Gox#February_2014_hacking.2C_losses.2C_shutdown_and_bankruptcy) supposed failure, this question feels more relevant. I find myself fortunate that I avoided them. Especially since there were news about a large scale [customer data loss](http://pando.com/2014/03/03/hackers-claim-to-have-breached-mt-gox-again-could-they-be-its-victims-best-hope/).

**Tags:** security, exchanges

> **Comments:**
> **username_1**: This would be a nice to have but as you said, with very little audibility of their team and how they run their operation something like this essentially cant / would struggle to exist.  
> **username_2**: I once wrote an [open letter to MtGox and Bitcoin Exchanges in general](http://blog.username_2.be/2013/05/an-open-letter-on-bitcoin-transparency.html). I believe MtGox replied it appreciated the feedback and would present it on their next management meeting. Nothing changed.  

---

## 4 answers

### Answer by username_3 on 2014-05-09. Score: 1

1. Are the operators anonymous? If so, this represents the highest possible risk.
2. How regularly does the exchange prove that it is solvent? This is possible to do with cryptography. If an exchange isn't doing it, its users should be asking why.
3. Is the exchange insured? Having someone else's money on the line (and lots of it) can be a good way to help protect your own. They might not let you behind the scenes as an individual but for an insurer to issue a contract, they will certainly be doing some due diligence.
4. The space is nascent enough and evolving so rapidly that trusted independent auditors (e.g. a Moody's, Fitch, or S&P) have not yet emerged. They will but until that time, the onus is on the individual to tread carefully.
5. Ask on IRC. Go to freenode #bitcoin and ask. You might be surprised at what you will learn. A lot of folks who got goxxed could have avoided their fates by doing this.
6. Read this: <https://bitcointalk.org/index.php?topic=576337> (List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses) for some perspective.
7. Finally, I would recommend the following:
   Hold some BTC yourself, if you feel technically capable of doing so. Use cold storage best practices. (Practice these procedures with trivial amounts until you feel comfortable).
   <https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet>
   Partition the rest of your holdings across several trusted, publicly visible entities such as BlockChain.info, CoinBase, and Xapo.
   Use email addresses to register that have multifactor authentication enabled (such as gmail) and then enable multifactor authentication on the sites themselves. Use unique, strong passwords.

If you do all of this, you will achieve a high level of security, distribute your risk, and you'll also learn a lot along the way.


---

### Answer by username_4 on 2014-03-16. Score: 1

> How can one gauge the reliability, customer service, and transparency of bitcoin exchanges?

I totally agree that Bitcoin feels like the wild west, with people selling snake oil left and right. It is early days, and that's how it works. If you want to be a pioneer, you will get arrows in your back. Right now, it's gambling, even more risky than gambling on the Stock Market.

If you're not comfortable with that, then wait. Down the road, there will be an influx of reputable exchanges. Right now, a "good" exchange won't make any more money than a fly-by-night exchange. But over time, the average reputation will increase.

The Internet worked the same way. Every Newspaper had an article on "Is the Internet a fad?" and warned "never use your credit card on the Internet". (Of course, kids these days don't even know what a newspaper is.)

> How can one gauge the reliability, customer service, and transparency of **Banks or Retailers?**

Think of how many reputable retailers had their credit card database stolen in the last 6 months. Think of how many banks went out of business without warning in 2008.

People are reporting on bitcoin exchanges that loose a few million, but nobody reports when a grocery store goes under and looses a few million.


---

### Answer by username_5 on 2014-04-08. Score: 0

I think the best way to gauge exchanges is based on their structure, the information they provide to the public, and their overall features. Exchanges are not banks (yet), so there is no set regulations for them to follow especially if the exchange is located outside the USA. Is the exchange proactive about security and precautions-also if an incident occurs is there some point of contact for more information? Some exchanges don't even have a customer support service, so that would be the first thing to check for. Second does the exchange openly tell you about it's structure, provides all the conditions to usage and terms upfront? Someone in another answer mentioned AML policies and that's only one possible indicator. Last you want an exchange that has a good selection of coins, can hold your coins safely, is NOT at the risk of insolvency, has an interface that is intuitive, but provides enough information to perform the desired tasks. Cryptsy.com happens to meet all those conditions. I can only mention Cryptsy because thats the one I know the insides of and can speak as an authority.


---

### Answer by username_6 on 2014-01-21. Score: -1

Based on their compalince , KYC and AML policies.

> **Comments:**
> **username_0**: Compliance is, them covering themselves from prosecution.  

---

