Due to the most recent events in the crypto space, it’s only normal to wonder whether it is safe to buy and sell digital assets. However, it is complicated to give a concrete answer to this question because things are not black and white. Yes, crypto is indeed volatile, but it also has security perks that make it appealing. Since crypto is relatively new, investors may not know how to approach it.
Unlike stocks, digital assets are prone to considerable price swings, including Bitcoin, the oldest crypto in the market. One essential rule which can help mitigate risks is to buy only as much as you can afford to lose. Also, it is vital to research the price of the crypto you want to buy so you can make wise decisions regarding your investments. For instance, Ethereum is currently at $ 1,551, while Bitcoin has reached $22,156. Remember that any crypto can plummet in value at any time, so exercise caution and make sure to diversify your investment portfolio.
Be aware of the risks in the crypto space
Before suggesting the best practices for safely investing in crypto, it makes sense to discuss the risks first. Here are some things you should be aware of when buying and selling crypto assets:
- Crypto scams pose a threat. Crypto scams are common, so it’s vital to be vigilant and cautious when dealing with unsolicited cryptocurrency requests. Scammers can use different tactics, like threatening to reveal sensitive information, offering fake giveaways or NFTs, or imitating reputable companies. It’s crucial to avoid giving in to these demands and always verify the authenticity of any message or request before making a crypto payment. Moreover, it is also advisable to use a trustworthy exchange and enable 2FA for an extra layer of security.
- Transactions are irreversible. Cryptocurrencies rely on the blockchain, meaning that the transactions are secure and tamper-proof. However, this also has a downside: once a transaction is confirmed, it can’t be undone. Hence, you can’t contact any customer service agent to process a refund if something goes wrong. This is why it is vital to take extra precautions when making crypto transactions and double-check the recipient’s address whenever you send funds.
- Paying with crypto has limited legal protections. Payments made with traditional debit and credit cards come with certain security features and protections, like chargebacks or fraud liability coverage, which are not available with crypto. Suppose you fall victim to a scam and lose your money. In that case, it won’t be possible to get it back.
Which crypto is the most secure?
No cryptocurrency is 100% secure, but assets like Ethereum and Bitcoin have some inherent features that make them more reliable than others. Their wider adoption makes them less susceptible to considerable price swings. In fact, security is what makes decentralized blockchain technology so appealing. Bitcoin itself was built to ensure more security in transactions and eliminate the need for third parties.
Whichever crypto you choose to buy, it’s best to keep it offline, as it can prevent hackers from getting their hands on your funds. You can do so by using a hardware wallet, also known as cold storage or cold wallet. Digital wallets – or hot wallets – which are available online, are more prone to theft. The only downside of hardware wallets is that they tend to be pretty costly; however, they are the safest option, so it’s worth choosing them.
How can you invest in crypto safely?
While it isn’t possible to eliminate risks completely, there are some things you can do to approach your investments safely.
Assess your current financial situation
Regardless of the type of asset you want to invest in, it’s crucial to evaluate your financial situation first, as that will help you figure out how much money you can afford to put in. Remember, the investing world comes with no guarantees, and it’s vital to make wise decisions. Never put on the line more money than you can afford to lose.
Use a secure device
Using a public computer comes with risks, as it exposes you to fraud. You’ll be required to give your personal financial information when purchasing crypto. The last thing you want is hackers to access it, so make sure to stay safe by using a VPN. Doing this will help protect your information and make the Internet connection safer and more reliable.
Choose a reliable exchange
When investing in crypto, one essential step is to research and choose a trustworthy exchange. Consider factors like transaction fees, security measures, and the exchange’s history and reputation. Also, read each exchange’s user terms and agreements to understand how your funds are stored and what happens to your money in case of bankruptcy or other scenarios. User reviews can also provide valuable insights into the experiences of other users with the exchange. By taking the time to do your research, you can make an informed decision and choose a platform that meets your needs and minimizes risks.
Consider how you want to store your crypto
While you can keep your currency in a wallet provided by the exchange, which is cost-effective, it can also pose issues if the exchange fails or you want to turn your crypto assets into real money. Hence, it may be best to choose an alternative like a hardware wallet, which allows you to store your crypto offline and use a private key.
Crypto is both appealing and risky
Cryptocurrencies are inherently risky due to the lack of regulation and price volatility. Moreover, investing in digital assets can lead to fraud and major losses, so it’s imperative to approach the industry cautiously. Despite these issues, no one can deny that crypto can be a valuable way to gain an additional revenue stream. In fact, some investors view cryptos as a valuable hedge against inflation, as multiple coins can be mined, which isn’t the case with regular currencies controlled by traditional banks.
That being said, make sure to follow the basic rules when investing in crypto, so you can maximize your gains as much as possible and avoid common scams and losses.
