While investing in cryptocurrency can be lucrative, it’s not without its fair share of risks. Unlike fiat currencies, digital currency like Bitcoin is not issued by a single monetary authority. Instead, it is mined and traded on various cryptocurrency exchanges.
The unregulated nature of the market for crypto assets has been both good and bad in equal measures. Pseudo-anonymity, minimal transactional fees, and the ease of transfer has made propelled cryptocurrencies onto the mainstream.
However, the lack of transparency and regulation has led to numerous scams, thefts, and heists occurring over the past few years. Besides making off with potentially billions of dollars in cryptocurrency, the perpetrators of these crimes oftentimes got away with no repercussions.
Thus this raises an important question for many of us – how do you exactly stay safe in what is essentially an unregulated industry?
1. Minimize your risk exposure
In a dangerous world, the only way to stay safe is to minimize your risk exposure where possible. From a crypto investor’s perspective, this means working only with reputable service providers.
E-wallet allow investors to store and easily access their crypto holdings at any one time. They are convenient and easy-to-use but also represent a significant security risk. At the point of writing, Bitcoin prices have remained competitive at over USD 13,000L per BTC.
Being such a high-value asset, your Bitcoin holdings need to be stored safely and securely. When you work with a relatively unknown e-wallet service provider, you run the risk of falling victim to a scam or hack attack.
For example, an ethical e-wallet company may abscond with your cryptocurrency holdings overnight leaving you with nothing. This is why it’s crucial that crypto investors always work with reputable e-wallet service providers and exchanges.
2. Invest in cold wallets
Hot wallets are an online service that stores your cryptocurrency online. The service provider usually charges a fee as compensation for their services. While the most reputable e-wallets are without a doubt secure, even they may not be safe from the most determined hackers.
This is why you should seriously consider investing in a cold wallet or hardware wallet. These are physical devices like portable drives that allow you to store your crypto encryption keys offline.
With a cold wallet, you can add an extra layer of security for your cryptocurrencies which makes it that much more difficult to hack into. Do now be lulled into a sense of false security, hardware wallets still need to be kept in a secure location at all times.
Click here to know what is a cryptocurrency wallet.
3. Spread out your storage
As the old saying goes “you should never put all of your eggs into a single basket”.
Ideally, spread out your crypto holdings over a variety of wallets – both hot and cold. This allows you to reduce the risk of losing everything in a one fell swoop.
In the event that you fall victim to a hack attack, you will be able to minimize your losses and prevent a hacker from getting away with your entire fortune.
4. Work only on a secure network
A good rule of thumb is to only operate on a trusted network when handling sensitive information. Whether you’re transferring cryptocurrencies or performing online banking, always take steps to ensure that your network is secure.
Regularly change your home wifi password and never share it out with anyone. Allowing strangers access to your wifi network opens up the door for hackers and thieves as they will be able to gain access to your PC or smartphone.
Forget the free wifi and keep your business on a secure wifi network at all times.
Safeguarding your crypto assets from getting into the hands of hackers is a simple task. However, it calls for discipline and good data hygiene practices. Keep yourself safe and protect your assets from all of the scoundrels out there.