Cryptocurrency is an incredibly popular investment at the moment, and for good reason. Year on year, growth rates of cryptocurrencies often outstrip leading stocks, making crypto trading a lucrative way to earn money. But there are a few downsides to crypto trading, and security is the main concern of them all.
Financial experts around the world say you should protect your investments – this has never been truer than now when it comes to cryptocurrency. Here are some tips on how you can stay safe while you buy and trade crypto.
Storing Your Crypto
There are many ways you can store your crypto, and some of them are safer than others. A common entry-level way of storing crypto is to use a software wallet – it is inexpensive (often free) and keeps all your crypto behind a wall. They are, however, susceptible to hacking. It is advisable that you research a software wallet fully before trusting it.
You may also have noticed that when you trade on a crypto exchange, you don’t necessarily have to move money back to your wallet. Instead, your crypto funds are held in your exchange account and stored on an exchange wallet. This is probably the least safe method of storing crypto as hackers actively target exchange wallets. Make sure you always remove your crypto after every trade.
The best wallet solution is a hardware wallet, often referred to as a cold wallet. These are detachable drives that allow you to store your crypto. You can take them offline at any moment, breaking the internet connection. This prevents hackers from being able to access your crypto.
Exchanges and Safety
Once you come to grips with the many different types of wallets, you may be wondering if the exchange you’re using is the safest one. The truth is that many of the most popular exchanges have been compromised by hackers at some point, which makes picking exchanges notably precarious.
There are, however, three easy ways to identify which is the safest option.
- Look at online communities and forums and read user experiences. Although anecdotal, user reviews can give you a fairly good idea about the exchange you’re looking to transact on.
- Search for the exchange name and the word “hacked” next to it. Then look at any news reports relating to that exchange. You will find some have plenty of hacking cases and others have none.
- Test the exchange with a small transaction. This not only allows you to check the process and identify any areas where it isn’t safe but also helps you see how trading on that exchange works. All exchanges operate differently so it is key to test out any exchange you’re looking to use full time.
If you are looking for a trustworthy decentralised exchange with a variety of trading options, check out Godex. It is an anonymous exchange with lightning speed of operations — only 5-30 minutes per transaction. As it does not keep any personal data of its user, Godex has quickly become one of the safest crypto exchange platforms in the market.
Passes, Keys and Wallet Safety
This is the area that has become a bit murkier as of late. The rule used to be to only share your public keys and never disclose private keys. Some networks and exchanges do ask for private keys though, so the important thing is to avoid them.
When making a transaction, provide only your public key (something that is safe to share) and don’t give anyone anything else that might be deemed sensitive. Don’t share account information, passwords, or private keys. If a network, platform, or individual asks for these, then it should be an immediate red flag.
How Common Is Hacking?
You have probably read a lot of information about crypto trading and hacking. This could make you feel as though crypto is a terribly unsafe investment, but the truth is that hacking is rare. Oftentimes, someone loses their crypto money by making mistakes with their personal security by not following the principles we described.
By actively taking steps to protect your crypto investment, you will be able to mitigate a lot of the hacking problems and horror stories you hear online. Simple diligence goes a long way when it comes to cryptocurrency. Although it can be a little time-consuming, it will save you lots of trouble down the line.
Reputable exchanges also put out a lot of information about crypto trading and safety to help their userbase stay secure and enjoy trading. Make sure you take it upon yourself to read widely on the crypto subject. Not only will you gather lots of tips and trading insights, but you will also learn how to look after your crypto.
Remember that hackers are always actively looking for new ways to beat the system. Though an exchange or trading method may be safe now, the situation might change tomorrow. That is why, as a trader, it is important for you to stay abreast of the latest news.