Why should I be mindful when investing in cryptocurrencies?
Investing in cryptoccurency can cause you to lose a lot of money if you do not follow safe practices while investing. It's imporant that you do your research prior to investing to ensure that your assets are protected.
Follow this list before your next purchase!
1) Be Mindful Of Your Network
Before you log into a cryptoccurency exchange for the firstime, an online cryptoccreuncy storage wallet, or anything related to your investments, make sure that your network is secure.
The first step to securing your network is to use a VPN (Virtual Private Network). VPN's encrypt your IP address and connect you to a VPN server and then to the internet, rather than directly to the internet. A VPN hides your online activity, making it more difficult for hackers to breach your data on the internet.
The next step is to be mindful of your network wherever you are, and be extremely vigilant when accessing your crypto assets through any public network, as this public access could be compromised.
When accessing your personal wallet, use only your secured personal network, or a trusted network of the same security.
Despite following these steps to ensuring your network is secure, while choosing passwords, you should use randomized letters, numbers, and symbols to have maximal security.
2) Utilize Multi-Factor Authentication For Access
Multi-Factor Authentications requires you to verify on multiple devices that it is you truly logging into your account.
You can use Google Authenticator, email authentication, text, or call authentication depending on what the login site has available.
If the password to your trading exchange is compromised, the hacker will not be able to log in to your account unless they have your cell phone to receive text messages as well.
Ensure the wallet and exchanges you are using provide this extra layer of security.
3) Use Only Safe Exchanges
Prior to investing, you should select an exchange that you'd like to purchase cryptocurrency through.
Before creating any accounts, do your own research on determining what exchange is best, and has the right features for your own uses.
A good rule of thumb is to look at the volume of transaction that an exchange has, and the higher the amount, the more people trust the exchange to process their transactions, as well as protect their personal data and assets.
Many exchanges will require personal information such as your SSN, address, copy of passport, copy of license, bank account info, or credit card number. You want to ensure the exchange will protect all this private information.
Even well-known exchanges have been subject to hacks and loss of funds, for example Cryptopia and Mt. Gox.
4) Store Assets In An Offline Wallet
It is vital that once you purchase cryptocurrencies on an exchange you transfer them to a wallet, preferably an offline hard wallet. Exchanges are subject to hacks, and if your funds are kept on a hacked exchanged, you could lose all of your assets held on that exchange.
An offline physical wallet is only accessible by you, and requires passcodes and private keys.
Write down your access information to your hard wallet in multiple safe locations so that you can still access your assets if you lose one of the sheets containing your information.
Another option is to utilize a software wallet or application, which is not as safe as a hard wallet, but much safer than storage on an exchange.
Before moving funds to a wallet, do your research and check that your wallet is fully functioning and from a reputable brand.
Remember: Don't Put All Your Eggs In One Basket
Just as you likely wouldn't invest all your money into a single cryptocurrency, you shouldn't store all your funds on a single wallet. If your hard wallet is lost, all of your funds on the wallet are lost. Consider multiple storage locations for your assets. This a vital risk management practice in investing.
- MAY THE MARKET BE WITH YOU -
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