Cryptocurrency Security: 4 Tips to Safely Invest in Cryptocurrency

How Secure Is Cryptocurrency?

Cryptocurrencies are usually built using blockchain technology. Blockchain describes the way transactions are recorded into “blocks” and time-stamped. It’s a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions that’s hard for hackers to tamper with.

 

In addition, transactions require a two-factor authentication process. For instance, you might be asked to enter a username and password to start a transaction. Then, you might have to enter an authentication code sent via text to your cell phone.

While securities are in place, that doesn’t mean cryptocurrencies are unhackable. Several high-dollar hacks have cost cryptocurrency startups heavily. Hackers hit Coincheck to $534 million and BitGrail for $195 million in 2018. According to Investopedia, that made them two of the biggest cryptocurrency hacks of 2018.

 

Tips to Invest in Cryptocurrency Safely

According to Consumer Reports, investments are always risky, but some experts say cryptocurrency is one of the riskier investment choices out there. However, digital currencies are also some of the hottest commodities. Earlier this year, CNBC forecasted that the cryptocurrency market would reach a value of $1 trillion by the end of 2018. If you’re planning to invest in cryptocurrencies, these tips can help you make educated choices.

Research Exchanges

Before you invest one dollar, learn about cryptocurrency exchanges. According to Bitcoin.com, these platforms provide the means to buy and sell digital currencies, but there are 500 exchanges to choose from, according to Bitcoin.com. Do your research, read reviews and talk with more experienced investors before moving forward.

Know-How to Store Your Digital Currency

If you buy cryptocurrency, you have to store it. You can store it on an exchange or in a digital “wallet,” for example, one of the crypto wallets described in our Blog post. Which cryptocurrency wallet to choose. While there are many different wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.

Diversify Your Investments

Diversification is a key to any good investment strategy, and it holds when you’re investing in cryptocurrency. Don’t put all of your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s best to spread your investment around to several currencies.

Prepare for Volatility

The cryptocurrency market is volatile, so be prepared for ups and downs. You’ll see dramatic swings in prices. If your investment portfolio or mental well-being can’t handle that, cryptocurrency might not be a wise choice for you.

Cryptocurrencies are all the rage right now, but remember, it’s still in their infancy. Investing in something new comes with challenges, so be prepared. If you plan to participate, do your research and invest conservatively to start.