It is no secret that the cryptocurrency market is flooded with newbies that are flocking in masses to make some money off it. They invest in all sorts of crypto-coins and ICOs, making the market accessible to all and in extension, become truly peer-to-peer.
Anybody with an internet connection, anywhere in the world can buy, sell and HODL cryptocurrencies and benefit off their investments in terms of returns. While this is great for all participants of the market, there are a lot of newbies that don’t fully understand the workings of the market, community and hence; the ecosystem.
They fall prey to hacks and thefts because they are unaware of just how susceptible their crypto holdings are to hackers and thieves. And incur major losses in the process.
Contrary to popular belief and media propaganda that hacking, thievery and losses are a part of the cryptocurrency market, there are multiple steps that a cryptocurrency investor can take to secure their holdings.
Here is a list of 4 such practices every cryptocurrency investor should inculcate in their day-to-day to make sure that their bases are covered.
Use an Offline Wallet
One of the most common mistakes every newbie makes while entering the world of cryptocurrency trading is using an online wallet service, often provided by an exchange. This is the easiest wallet to setup and use because it is already on the exchange, but also the most susceptible to hacks.
The reason for this is all cryptocurrency holdings on an exchange are centrally stored and hence form a honey-pot of coins. Making it attractive to hackers and hence making the users victims of them.
The most foolproof way of storing your cryptocurrency assets is in an offline wallet. Offline wallets can be operated either through your desktop, mobile or specifically dedicated hardware.
Use Multiple Level Authentication
When you take your coins off an online wallet, what you’re basically doing is taking control of their management and safety. Most online wallets are password protected that can easily be hacked and passwords can be stolen too. So when you do use an offline wallet, make sure there are multiple levels of authentication before being able to access your holdings.
The advantage of having multiple levels is that it takes longer to breach and hence the incentive for hacking is lost.
Remembering Your Private Keys
If you’ve done the following upto now, the biggest risk to your cryptocurrency assets and holdings is you. Forgetting passwords and pin codes is something we all do and there is a probability that you will do the same for this.
So backing up your passwords is a good idea. And having a hard copy of your private keys and passcodes in a safety deposit box, as dramatic as it sounds, may not be the worst idea.
Diversify
In the cryptocurrency market, along with the high levels of volatility, there is the added risk of a company, that runs a particular crypto coin, shutting down because of bankruptcy or other reasons.
So when investing in crypto coins, it is a good idea to have a good intersection of everything that the market has to offer. This way, you’ve made promising investments in all of the markets top players, thereby increasing your chances at making a decent return on investment.