There is no denying that we all want to get rich. Better yet, we want to do it in such a way that it will take the least effort but come with maximum returns. Of course, this is not a feasible way to accumulate wealth for everyone.
However, there are increasing opportunities to invest that are accessible. One such method is via cryptocurrency. But what is this new technology really, and how can we use it safely?
Unlike the money we currently use, cryptocurrency transactions are not verified by banks. Instead, they rely on encryption, and all transactions are recorded on a public ledger.
Think of game money, but it is a resource that you can actually use to get things in real life. Cryptocurrency is stored in a digital wallet that works just like real cash.
Cryptocurrencies are designed to be as safe as possible. They are built with blockchain technology that determines how transactions are recorded into “blocks” and time-stamped.
Two-factor authentication is also used to increase security. In essence, the digital ledger of transactions is made difficult to be hacked.
Now, the most worrying part may be the very thing that cryptocurrencies rely on verification by the public rather than an institution.
This means that all the information is available, and you (and your money) can be hacked. This makes cryptocurrency one of the riskier investment options out there. However, it remains a hot commodity because of its potential meteoric rise in value.
When investing in cryptocurrencies, you should do your best to do so safely. Here are some tips to help you secure your cryptocurrency investment.
Research Cryptocurrency Platforms
One of the first things you should do when investing in cryptocurrency is to decide which platform to use.
There are a great variety of cryptocurrency exchanges out there, each promising security and great returns.
You should read up on these exchanges through reviews such as this CoinSpot review. From there, you can learn about these exchanges from a neutral party.
You can also verify the claims laid out. For example, CoinSpot has never been hacked and is also the first cryptocurrency platform in Australia to receive the internationally recognised ISO 27001 certification for information security.
Safe Storage
Cryptocurrency wallets are something of a misnomer as they do not store the funds themselves. Instead, they store your cryptographic keys.
These keys are used to access your money. This means that losing your key can mean losing your entire cryptocurrency savings.
One way to prevent this is by using hybrid storage. You should have both hot (software) and cold (hardware) storage, with cold storage being more secure.
Cold storage options include having a physical USB drive that is unconnected to the Internet. This way, you can control the access to this wallet and prevent hackers from getting at it.
However, this means that it can be inconvenient to access, which makes having a hot storage option desirable too. Using both means that you can have the best of both worlds.
Never Share Your Key
Like your credit card information and passwords, you should never share your secret cryptocurrency key.
This is akin to handing someone all your money. Regardless of your trust in the recipient, there will always be a chance that your information gets misused and misappropriated. Thus, it is imperative to keep this key secret at all costs.
Strong and Unique Passwords
Just because cryptocurrencies have two-factor authentication does not mean you can slack on security on your end.
Make sure that your password for each cryptocurrency account that you have is unique and strong.
There will always be a chance that hackers will break through and steal your money. It is prudent to assume that this will happen and act accordingly.
With strong and unique passwords for each platform you use, you can be sure that a breach can be localized and not wreak havoc on all your assets.
Be Wary of Scams
Since hackers will find it more difficult to attack directly at cryptocurrency exchanges and platforms, they may target you indirectly instead.
Be wary of phishing scams that steal your login credentials. There may also be fake exchanges set up to lure you into investing with them.
Diversification
Like all other investments, you should not put all your eggs into the same cryptocurrency basket.
There are thousands of cryptocurrency options currently available, so you should definitely spread out your investments.
Be Prepared for Volatility
Cryptocurrency markets are incredibly volatile. Thus, you should be prepared for ups and downs and have contingencies to ensure that you will not be left destitute.
If you find yourself getting too worried about your investment, you may want to find something else to invest in.
Interesting Related Article: “What Is The Best Way To Do Fundamental Research On Cryptocurrency?“