Cryptocurrency safety: 4 tips for safely investing in cryptocurrencies, What is cryptocurrency?
Technology has changed the way people work, communicate, shop, and even pay for products. Businesses and consumers no longer prefer cash, and this behavior is giving way to contactless payments like Apple Pay. With the quick flick of a smartphone, consumers can pay for their items at digital cash registers. Now, a new payment system is emerging: cryptocurrency.
Everyone has probably heard of Bitcoin by now. It was the first cryptocurrency to go mainstream, but others are gaining popularity. There are more than 2000 different types of cryptocurrencies and more are being developed every day.
Research suggests that most people have heard of cryptocurrencies, but don’t fully understand what it is. So what is it, is it safe and how do you invest in it? To help, we will answer those questions. Think of this as Investing in Cryptocurrencies 101.
- What Is Cryptocurrency?
- How safe is cryptocurrency?
- 4 Tips to Invest in Cryptocurrency Safely
What Is Cryptocurrency?
Cryptocurrency is a digital payment system that does not depend on banks to verify transactions. It is a peer-to-peer system that can allow anyone, anywhere to send and receive payments. Rather than being physical money that is transported and exchanged in the real world, cryptocurrency payments exist purely as digital inputs to an online database that describe specific transactions. When you transfer funds in cryptocurrencies, the transactions are recorded on a public ledger. Store your cryptocurrency in a digital wallet.
The cryptocurrency got its name because it uses encryption to verify transactions. This means that advanced encryption is involved in the storage and transmission of cryptocurrency data between wallets and public ledgers. The goal of encryption is to provide security and protection.
How safe is cryptocurrency?
Cryptocurrencies are generally built using blockchain technology. Blockchain describes the way transactions are recorded in “blocks” and time stamped. It’s a fairly complex technical process, but the result is a digital cryptocurrency transaction ledger that is difficult for hackers to manipulate.
Additionally, transactions require a two-factor authentication process. For example, you may be required to enter a username and password to initiate a transaction. Next, you may need to enter an authentication code that is sent via text message to your personal cell phone.
While the securities are in place, that does not mean that cryptocurrencies are not hacked. In fact, several high-dollar-value tricks have cost crypto startups a lot. Hackers hit Coincheck for $ 534 million and BitGrail for $ 195 million in 2018. That made them two of the biggest cryptocurrency hacks of 2018, according to Investopedia.
4 Tips to Invest in Cryptocurrency Safely
Investments are always risky, but some experts say that cryptocurrency is one of the riskiest investment options out there, according to Consumer Reports. However, digital currencies are also some of the most popular commodities. Earlier this year, CNBC forecast that the cryptocurrency market is expected to reach a value of $ 1 trillion by the end of 2018. If you plan to invest in cryptocurrencies, these tips can help you make informed decisions.
- Research exchanges
- Know how to store your digital currency
- Diversify your investments
Before investing a dollar, learn about cryptocurrency exchanges. 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 speak to more experienced investors before moving forward.
Know how to store your digital currency
If you buy cryptocurrencies, you must store them. 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 types of wallets, each has its own benefits, technical requirements, and security. As with exchanges, you should research your storage options before investing.
Diversify your investments
Diversification is key to any good investment strategy, and it also holds true when investing in cryptocurrencies. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options and it is best to spread your investment across multiple currencies.
Prepare for volatility
The crypto market is volatile, so be prepared for ups and downs. You will see dramatic price changes. If your investment portfolio or your mental well-being can’t handle that, cryptocurrencies may not be a good option for you.
Cryptocurrency is all the rage right now, but remember, it is still in its infancy. Investing in something new comes with challenges, so be prepared. If you plan to get involved, do your research and invest conservatively to get started.
DisclaimerThe information on this website is not intended to be financial, business, investment or other advice, and you should not consider the content of the website as such. crypto.onlinenews.live does not recommend that you buy, sell or hold any cryptocurrency.