Cryptocurrency is said to be just a fairly new concept to many investors as it only existed for more than just a decade. Since the debut of the first-ever cryptocurrency or crypto in the market a few years back, many have been released in the coming months. The rapid increase in cryptocurrency popularity is very evident from its market capitalization value. Its intensity and rate of growth are believed to be increasing as time passes by.
Although crypto uses a decentralized network and no central authority controls it, it’s a digital form of money. Hence, its storage involves different types of risk. Many factors may pose danger to your cryptocurrency assets such as cyber-attack, Internet security loopholes, negligence, and many more. Thus, it’d be best if you took the necessary precautions to protect your cryptocurrency assets from the get-go.
Steps To Ensure Your Crypto Assets’ Safety
Cryptocurrency has come a long way since its inception. But with the increasing value of crypto-based assets and the rising number of cybercrimes today (hacking, theft, and the like), it’s essential to take specific precautionary measures to protect your investment. Below are some tips that can help you protect your digital assets.
- Seek Legal Advice
Aside from cyber-attacks, tax evasion and money laundering are believed to be the two most significant risks to your cryptocurrency. Since crypto is already considered a financial asset in some countries, you must ensure that you follow the current laws if you reside in one of those countries.
You must seek legal advice on investing and storing cryptocurrency properly. Law firms that focus on catering to clients dabbling in the crypto market might be your best option. They know precisely how to help you choose the most secure way to protect your digital assets safe from legal and tax threats. You may want to check the law office of Blake Harris and other organizations to know more about your possible options.
- Ensure That The Exchange You Are Using Is Trustworthy
With numerous crypto exchanges that exist nowadays, you need to be careful as there are exchanges that may only operate in a few months and run away with user’s funds soon after.
Some exchanges may get hacked, while others can lose significant amounts of users’ cryptocurrency assets which will lead them to file for bankruptcy. Thus, you must only choose reputable and reliable exchanges that can ensure the safety of your crypto assets while keeping them accessible at all times.
It’s advised that you check if the exchange you want to join has proper security measures in place such as cold storage systems for liquidity, exchange platform isolation, and others. Previous reviews and testimonials from former and current users might also help get a better idea of how the exchange you are about to use works and how safe it is.
- Diversify And Don’t Take On More Risk Than You Can Handle
Don’t keep all of your proverbial eggs in one place. You might think that investing all of your money in just a few cryptocurrencies is the best way to get rich quickly, but for some investors, it’s actually not a good idea. The cryptocurrency market can be pretty volatile and even experienced crypto investors sometimes lose their tokens due to its highly unpredictable nature.
Cryptocurrency investments are believed to be risky but if you diversify your portfolio you’ll be able to minimize the risk of losing everything in one untimely swoop.
- Use Cold Wallet
Since cryptocurrency uses a secure and decentralized digital network, its chances of being hacked will only depend on the user’s security measures.
A cold wallet allows you to store your private keys away from the Internet, making sure that it’s not connected in any way to the web and you’re the only person that can access it. Hard wallets and paper wallets are examples of cold crypto wallets. Hard wallets are physical devices that keep your cryptocurrency information offline, akin to a USB (Universal Serial Bus) drive, while a paper wallet is where you print out your private keys and store them in a secured place.
On the other hand, using a crypto hot wallet is only advisable for those who need to transact with crypto often. For more convenient transactions, you can choose untraceable cryptocurrencies and wallets like XMR Wallet. It is proven that Monero transactions are private and untraceable which also often do not incur bank fees. Examples of hot wallets are web-based wallets, mobile wallets, and your account on crypto exchanges which are all connected online. These are said to be more prone to cyber-attacks if safety measures are not set up.
- Keep Your Private Keys Safe And Secure
Once you have created a wallet and have received your private keys, ensure that it’s in a secure place only you know about. Also, never show your hard wallets or paper wallets to anyone else. Make sure to back up your private keys in multiple ways. In the event that one of them gets lost or damaged, you have backups and can still access your crypto assets. Remember that if you lose your private key, there’s no way to recover or restore your prized holdings.
- Use Complex Passwords For Every Account
Passwords are your first line of defense against cybercriminals. Make sure to use complex passwords. It’s recommended that you don’t use the same combination of letters, numbers, or special characters for other accounts. This practice might be a little tedious, but the security it provides is worth it.
- Use Two-Factor Authentication
Two-factor authentication adds an extra layer of security when accessing your accounts. It makes sure that activity on the account is only possible with access to your password and authentication through a physical device (usually your mobile phone).
Whenever a transaction is made or each time you access your wallet, you’ll receive a two-factor authentication code to your registered device and you must enter it before being allowed to proceed.
There are different ways to apply two-factor authentication including apps for your smartphone and SMS (Short Message Service) codes. Using two-factor authentication is regarded as a great way to protect yourself and your account from being compromised by unauthorized agents.
- Update antivirus software regularly
Malware can be used by cybercriminals to target cryptocurrency users and steal their information like passwords and even private keys by directly monitoring their activities online. Hence, crypto owners need to install and update antivirus software regularly so that these malicious entities won’t have the chance of stealing user’s cryptocurrency assets.
- Identify Phishing Schemes
Phishing is an online attack where cybercriminals deceive Internet users and steal their information by tricking them to click on fake links. Usually, phishing scams will send out emails that appear as if they came from someone you know or trust. That’s why it can be very tricky for people to recognize at first glance and they fall victim to this scheme.
Never allow scammers to trick you by emails that look real. Be wary of copycat sites as well and always check if the URL (Uniform Resource Locator)used is correct. Some email providers offer features that combat malevolent phishing tactics-make sure to turn them on for added protection.
Cryptocurrency might need many security measures in place like not using a crypto hot wallet, but with the tips mentioned above, you are one step closer to investing and storing your digital assets safely.
Taking care of your crypto assets is like taking care of your holdings in the real world. Although there are not enough ways to protect yourself from every threat present out there, becoming more vigilant will help you keep your investments safe while dabbling in the highly exciting and booming crypto market.
Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.