Hackers, scams, and shady exchanges exist in crypto, making it feel like the Wild West at times. Unfortunately, there is no one to hold responsible in the event of a loss. As a result, you must be ready for the worst.
How Safe Is Cryptocurrency?
It is difficult to say how safe crypto is. However, you should be aware of some security risks associated with cryptocurrency before making your first trade.
- Firstly, crypto is a highly volatile digital asset, with price fluctuations on a roller coaster.
- Secondly, the ecosystem is largely unregulated. So, in the case of lost funds due to hacks or scams, your money is gone.
Is It Good to Invest in Crypto?
While the popular cryptocurrencies have risen in price over the years, it is essential to know that crypto, like other investments, is risky. So before purchasing a certain coin, you need to understand that:
The Crypto Market Is Volatile
Be aware that the cryptocurrency market is highly volatile, so expect ups and downs. Prices will fluctuate dramatically. If your investment portfolio or mental health can’t handle it, cryptocurrency may not suit you.
You Could Lose Funds
Market fluctuations are not the only way you can lose funds. As with other digital assets, there are different ways an investor can lose funds.
- Cyber Attacks and Hacking. This happens a lot with exchanges. You might have heard of exchanges losing as much as $200,000,000 to hackers.
- Scam. Crypto traders can fall victim to crypto scams like rug pull, initial coin offering for fake coins, as well as pump and dump schemes.
- Loss of Private Key. A private key is like your password; you can not access your funds once you lose them. So keep your private key safe.
So, What Is the Deal With Crypto?
Cryptocurrencies are based on blockchain, a distributed public ledger that keeps track of all transactions that are updated and held by currency holders.
Cryptocurrencies (which are entirely digital) are generated through a process known as “mining.” In essence, miners must solve mathematical puzzles on specially equipped computer systems to be rewarded with Bitcoins. The mining process is complicated, and it might take days to mine a Bitcoin.
Crypto traders can purchase coins from exchanges or brokers. The coins are then stored and spent in crypto wallets. Guarda wallet combines all these functions. You can buy, store and spend your coins on the platform.
How Does Crypto Investment Work? How to Safely Invest in Crypto?
Some of the most common risks associated with cryptocurrencies can be avoided by taking a cautious approach. Here are some of the tips to use:
Learn about cryptocurrency exchanges before you invest. There are around 500 exchanges to choose from, according to estimates. Before making a decision, do your homework, study reviews, and consult more experienced investors.
Research the Cryptocurrency
Learn everything you need to know about the cryptocurrency you wish to invest in.
- Understand the creator’s plans, particularly for new coins. Read the cryptocurrency’s whitepaper available on its website.
- Gather information by joining an online crypto forum on Reddit, Twitter, etc.
- Look up relevant information about the developer’s history and reputation in the crypto market.
Store Your Digital Currency Safely
When you buy cryptocurrency, you must keep it somewhere safe—wallet. There are two main types of wallets—hot and cold. Each wallet has its advantages, technical requirements, and security.
A hot wallet is a wallet that can be accessed online, while a cold wallet is a wallet that can be accessed offline. Guarda is an example of a hot wallet. It can also be integrated with Ledger, a cold storage wallet.
To conclude the article, we advise you to understand the market and how it works before buying any cryptocurrency. And at the same time, prepare for volatility.
This text is written for information purposes only and never constitutes a call to action. All financial transactions carried out by you are made at your own risk. The Guarda editorial staff reminds you of the riskiness of all kinds of speculation on all kinds of financial markets.