Are you planning to invest in cryptocurrency? To avoid making costly mistakes, read these tips. After more than 10 years, the cryptocurrency landscape is still wild west-like.
Some people can make big decisions that lead to huge gains while others may lose their entire portfolio in one day. How can you protect your capital against changing exchange rates? How to keep track of crypto for taxes? And how can you safeguard your profits from fraudsters?
How to choose the right cryptocurrency and minimize risks
First, you need to choose which cryptocurrency to invest in. There is no set rule. Any token could crash one day, and rise the next. To anticipate these movements, a cryptocurrency investor must have a lot of luck. There are steps you can take to protect your investment.
A coin such as Bitcoin or Ethereum is a good choice for beginners. It has a track record and high demand among traders. These coins don’t tend to increase in price as rapidly as altcoins. If you need to sell the token quickly it will be easier to find buyers.
Don’t get fool
Don’t let overly generous offers fool you when choosing a cryptocurrency or an exchange platform. In the world of cryptocurrency investing, no one gives away anything for free. Be wary of anyone who promises you exceptional benefits.
While early investors received the promised return, others were not so fortunate. The “revolutionary platform”, was nothing but a Ponzi scheme.
Common features among disreputable cryptocurrency projects include:
- In previous news about cryptocurrency, the members of the project group have not been mentioned. Sometimes, the project team might be composed of well-known actors. However, this is very rare.
- Creators of cryptocurrency promise guaranteed profits. This is reminiscent of a Ponzi scheme.
- The project code repository at GitHub rarely receives updates. This means that there is no such project or no permanent assignee.
Do not invest in cryptocurrency if it meets these requirements.
What are cryptocurrencies? How do they store tokens?
Tokens can be stored in cryptocurrency wallets. The software is the basis of “hot” and “warm”, which allow for fast funds transfers. They are also vulnerable to hackers due to their constant internet connection. To increase security and make it harder to hack, enable two-factor authentication if you plan to use a hot bank account.
Stand-alone wallets are the best option for safe “cold” wallets. These wallets look a lot like a keychain or USB stick.
You should also save the passwords and codes you see when setting up your wallet. Many wallet developers will only display your password once for your security. If you are certain you won’t lose or get scratched, write them down on paper.
You cannot recover access to your wallet if you forget your password. Your assets and other valuables will also be lost.
How can they steal cryptocurrency without an attack?
Sometimes, attackers don’t need to have direct access to the victim’s wallet to steal their cash. Sometimes, the owners uncover the secret.
Even if you’re certain that you won’t be tricked, it is important to be aware of the changing attack strategies. Think carefully about the motives of anyone who offers you free coins. There’s a chance that you are being set up if they ask for a deposit.
Remember that cryptocurrency scammers are attracted to them like flies and honey because they are speculative. Cybercriminals profit from the high-risk nature of crypto investors.
How to protect yourself while trading cryptocurrencies
It is crucial to use a secure communication channel for cryptocurrency transactions. Cybercriminals could intercept your transaction details and create a fake website to steal your assets if you have access via public Wi-Fi to the platform’s site.
Although it is safer to trade via a home network than from a public one you must protect it well. You will need to change the default password of your router with your own.
Some tips are:
- Before you sign up for currency exchange, study the market and do not enter into any bold trades.
- You can diversify your risk by investing in cryptocurrencies to protect against sudden price drops.
- Do not believe in promises of free coins, especially if they are celebrities. Their accounts could have been hacked. It could be true, but it is still likely to be a fraud.
- Install an antivirus to protect your Internet connection on all devices that you use for cryptocurrency exchange.
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