Cryptocurrency is frequently described as the wild west of the virtual world as it can be exciting and risky to the same extend. Thus, investing in digital currency is quite intimidating to new investors. However, you can be on the safe side and make merry of the endless benefits crypto has to offer by adopting the proper security measures. In this writing, we will take you through various precautions of trading crypto and share some information on selecting your exchange carefully.
In Review, What Is Cryptocurrency?
Cryptocurrency is a peer to peer system that enables people to make and receive payments remotely. Digital currency is built on blockchain technology and ensures security by using cryptography.
Crypto is different from other online platforms such as PayPal since it does not use individual information to make transactions. Crypto relies on complicated algorithms for validation purposes instead of using social security numbers and names as identifiers. In contrast, PayPal uses email addresses to process payments; thus, it is precarious if an individual gains access to your email account since they will access your resources in the PayPal account.
Digital currency is stored on a secure blockchain since each transaction process has a verification record before it is approved. Blockchain technology is similar to an electronic ledger that is time-stamped and is viewable by the public.
Before you commence trading crypto, it is crucial to do thorough research on different exchange platforms. You can extract information from online articles, blog posts, or from individuals who have used the exchanges in question in the past. Adequate research will aid you to choose a safe and trustable exchange.
Other factors to consider when selecting an exchange would be if they support fiat currencies, that is, ease of use, withdraw or deposit limitations and country restrictions. Some exchanges do not allow transactions; for instance, Bitmex enables only bitcoin deposits. Thus, it is fundamental to be aware of every limitation of different businesses.
Also, for techno-savvy individuals, there are many ways to stay secure when trading online currency, such as enabling two-factor authentication where possible and also using offline storage forms with hardware wallets.
The Various Types of Wallets for Storing Your Cryptocurrency
There are various types of wallets to store your digital currency. You can use a more traditional software program-based wallet; however, it comes with a higher risk if an individual hacks into it; it is impossible to get your finances back unless you have enabled the two-factor authentication.
The most publicised option to stay secure when keeping your crypto is using the hardware wallet, which stores private keys on a device disconnected from the internet and is usually encrypted with a password or pin code so you can only use them.
An alternative option for storing cryptocurrency offline is using paper wallets printed out from an internet-connected generator and then jotting down as much information (private key, public address) as possible before terminating access to any computer afterwards.
Use Diverse Strong Passwords for Every Platform You Use
Another way to stay secure when trading crypto is to use a different and strong password for each platform you use, which means that you should use a different password for your phone, Email account and exchange. However, if you use the same password, you should consider using a solid password consisting of letters, numbers, and so on.
Using a strong password is easier for security since it makes it hard for hackers to access your account. The hackers will have to access three places instead of one to get to your crypto or personal information, which proves to be impossible.
Generating strong passwords combined with two-factor authentication can offer safe and secure trading in the crypto world.
What Is Two-Factor Authentication?
Two-factor authentication needs two different factors to be complete; this means that you will require a password and something else such as a cell phone or a Google authenticator app on another device. It functions as an extra layer of security when an individual has one thing, such as a password or username but not both—other available devices such as fobs with incorporated time-based codes mainly used for business purposes.
In this scenario, if a person has your account information, they will still have to go through various steps before transferring money out of it. Additionally, consider a waiting period where the request requires validation by yourself or the admin at the exchange who is aware of it.
How to Select a Reputable Exchange for Trading Crypto
Choosing a reputable exchange for trading crypto is fundamental, particularly if you plan to trade crypto. Different exchanges offer various features; thus, it is essential to carry out your research and opt for the one that meets your needs. Ensure that the exchange platform you choose has good customer service, excellent reputation and high-security services.
Always check multiple reviews to ensure that the exchange is trustworthy and recommendable to be on the safer side—research on various criteria such as the time it takes to withdraw from the trading platform.
Look out for the following factors when selecting a cryptocurrency exchange:
1. Security measures the exchange has put in place, for instance, two-factor authentication.
2. Reputation of the exchange and their employees, check reviews online, and you can as well take screenshots.
3. You should use encrypted passwords in every service you carry out with the exchange, so if someone gets access to one thing, it would be difficult for them to get into others. However, if any personal credentials are leaked during data breaches due to poor security measures, it is advised to change the passwords instantaneously.
Common Cryptocurrency Scams
There are different types of scams you may run into:
Phishing is when an individual tries to get your personal information such as credit card numbers or passwords through deceptive tendencies, which usually occur via social media platforms, messages and Email. Thus, it is crucial to note the sensitive information on these platforms since they are frequently the target.
Also, counterfeit platforms are built to look like the original ones; therefore, be on the lookout for fishy sites.
Phoney exchanges look like authentic exchanges but steal your money by asking for funds upfront or withdrawing it from your accounts later without your approval, such as in Wire Transfer.
Trading bot scams
Trading bot scams may look like an email you receive from a Bot Company that asks for funds upfront, such as PayPal, or withdraws it without your authorisation, for instance, wire transfer.
Also, someone may try to lure you into giving personal information, including passwords, pin codes, or even credit card numbers, using deceptive measures, which could take place over messenger, SMS, or Email and then steal your funds.
Many people have reported having fallen victim to these trading bot scams. Also, some sites imitate the authentic ones, but instead, they tend to ask for sensitive data to collect more individual information to extort ransom. You can create your bot to minimise the risk of falling into the hands of scammers.
Now that we have reviewed: what cryptocurrency is, the various types of wallets there are, you have set up a solid and secure password, you know about two-factor authentication, and you have chosen a reputable exchange. Also, you are aware of various scams; this means that you are good to conquer the crypto world.