How to Invest Securely in Crypto
How to Invest Securely in Crypto
With the increase in the hype around digital payments, this may be the best time for you to broaden your investment fields and dive into the crypto market.
A fellow investor cannot overlook the gains with online crypto. We have seen people emerge into millionaires by their smart trading in this ocean of digital money, and the said millionaires are widely termed as whales.
But before one jumps into this vast ocean, they should be well informed of the risks and returns it can offer you and have proper knowledge on how to trade crypto that is to, of course, minimize the chance of losing your hard earned money in these strong waves.
While you may have definitely heard about cryptocurrency and might even be considering investing in it, there are many points to keep in mind before taking action, investing, where to invest, and is cryptocurrency investment secure enough? We're here to answer all of that for you.
What is cryptocurrency
In layman's terms, it is a virtual currency that is encrypted and decentralized. The encryption provides high security during the transfer of coins. They are made with blockchain technology, which is complex, and thus, it is difficult for hackers to tamper with. You can exchange coins without a middleman and a limit ( two of its advantages over the traditional method). As of now, Bitcoin and Ethereum are among the best crypto trading platforms. Bitcoin was the first platform to issue online crypto. That's not to say that you can not look for other options, there certainly are investors who are willing to buy cheap and then sell it high on unknown cryptocurrencies.
The term that you'll often find associated with cryptocurrency is its volatility. Ever went to a pawn shop to sell an item? What happens there is no matter how much you spent when you bought the item, the shop owner will only pay you the amount he feels the item is worth, in other words, it is sold at the price the buyer deems fit.
It is somewhat the same for cryptocurrency as well, due to not being backed by a government, it has value only, and when people believe it to. This may make it riskier as compared to other markets like stock markets.
How to invest securely in cryptocurrency
With that being said, let's now talk about making secure investment, a plethora of risks could be avoided by enough research about the exchanges, wallets, and the market volatility in general.
Safety of data
While the encrypted cryptocurrency is safe in itself, but the end of the software or hardware that you use to store your data isn't safe, then you're at high risk of data theft, which could eventually lead to you losing your money.
First, make sure that you are keeping your antivirus software up to date to be assured of the fact that you aren't giving out your valuable data to hackers.
An exchange is a place where you buy and sell your virtual money. Now there are over more than 500 exchanges to make use of, and each has its own set of pros and cons, not all exchanges accept fiat currency ( paper money, example: dollar), some are only restricted to bitcoins. So researching them and choosing one which suits your personal needs is crucial.
Now that you've gone ahead and bought yourself those coins, the question arises on where to store it, for that you need a cryptocurrency wallet, practically it is better to have a wallet before you buy your currency. They are two types of wallets: software and hardware wallets, the hardware ones are comparatively safer. The exchange platforms also provide wallets to store your coins, but it is not as secure as your own personal wallet.
Have clear data of the amount you can invest and possibly lose, the time you have to trade, using that devise your blend of coins. If you happen to invest using a contract for difference (CDF) or spread bet (FSB), know that the gains or loss will be heightened by the leverage and thus proceed only when you're sure that you can stomach the loss, which might be more than what you invested.