How Safe Are Cryptocurrencies
Cryptocurrencies have gained widespread adoption in the past few years, as they provide a more decentralized and safer means of handling financial transactions. But a recent cryptocurrency anti-money laundry report shows that hackers pocketed over $4 billion from cryptocurrency-related cybercrimes in 2019 – a clear indication that there is a substantial security risk in the cryptocurrency space. Although cryptocurrencies use robust blockchain technology and a variety of other effective cryptographic techniques to protect financial transactions from hackers, other elements of this ecosystem could be vulnerable. For instance, digital wallets, exchanges, and human mistakes can heighten the risk of hacking.
Is it Safe to Invest in Cryptocurrencies?
Safe investment doesn’t exist. All investments carry some aspects of risks. But definitely, some investments are less risky than others. Cryptocurrencies tend to be highly volatile, which means they can result in a substantial loss at one moment and huge profits at the next moment. If you do a deep study of the marketplace and invest wisely, cryptocurrency can be a lucrative activity.
Countless cryptocurrencies are available out there, but they are not all created the same. Before investing in any cryptocurrency, be sure to do your due diligence. Find out who created it, whether the exchanges where that coin is being traded are secure, and whether they do a thorough screening.
Once you buy your digital currency, be sure to store it safely. You can keep it in a digital wallet. Although there are a variety of digital wallets, each has its unique upsides, technical requirements, and safety measures. So, ensure you compare different storage options before investing.
Just like any other investment, diversification is crucial when you’re investing in digital currencies. Don’t invest all of your hard-earned money on a single coin. Instead, research other reputable coins out there and invest in a few of them.
Before investing in cryptocurrency, ensure you have a strong investment portfolio and great mental health. These two things will help you handle the highly unpredictable cryptocurrency market.
Tips for keeping your cryptocurrencies safe
1. Use Wallets from Reputable Exchanges
Some wallets are just malware in disguise. That’s why you must do your research and choose wallets from reputable exchanges. One of the greatest advantages of choosing a regulated exchange is that it’s more likely to have robust security measures in place.
2. Store your cryptocurrencies in a cold wallet
Instead of storing your coins on an online exchange, you can keep them on an offline USB device or hard drive. A USB device protects your coins by requiring you to verify or revoke any transaction by just touching the device. That way, it’s impossible for hackers and other cybercriminals to track your keystrokes.
3. Store Your Private Keys Safely and Securely
Most people have the same simple passwords that they use on all their social media platforms. If you’re one of them, don’t make the mistake of using such passwords as your private keys. Instead, use sophisticated two-factor authentication techniques. Remember to use multiple keys to authorize a cryptocurrency transaction, as that will significantly minimize the odds of fraud.
4. Create a backup of your private keys
Having a backup of your private keys in place ensures you’ll always have access to your coins even if your keys get lost. Create backups of your cryptocurrency hoard as regularly as possible, but especially after every transaction. Store them securely in an offline hardware wallet as well as in the cloud. That way, if the hard drive crashes, your data will still be safe and sound in the cloud, and vice versa.
5. Use a VPN to encrypt your data
A VPN service like NordVPN will safeguard your sensitive data leveraging industry-leading encryption to keep hackers from tracking your trading activities. Some of the things that make NordVPN stand out from other VPN services to include super-fast connection, the ability to block malware and adware, no data leaks, a strict no-logs policy, and 24/7 customer support. (I found out more about VPN referring to this NordVPN Review)
Conclusion
Regardless of their volatile nature and questionable reputation, cryptocurrencies keep on gaining massive attention and attracting more investors. But if you’re planning to invest in these digital currencies, you should be familiar with both financial risks and security threats. Although cryptocurrencies use highly secure blockchain technology, hackers are getting smarter every day and using advanced methods to access wallets and exchanges. So it’s important to implement the right security strategies to keep your cryptocurrency investment safe and secure.
Photo by André François McKenzie on Unsplash
