Cryptocurrency is a smart alternative investment. It can yield incredible results, and it’s going to continue to make an impact for a long time to come. That being said, trading cryptocurrency is not without risks. Cryptocurrencies aren’t secured by banks or traditional financial institutions, and the threat of hacking is real. If you want to make money trading cryptocurrencies, and you will if you do it right, you don’t want to do it without these words of wisdom.
Protecting Your Mined Coins
Mining cryptocurrency is the only way to get it for free, and it can be extremely profitable. A single bitcoin is worth thousands. You can secure your mining efforts by using a hashpower provider, such as Genesis Mining. Their powerful mining farms are secured for miners.
Once you’ve got your coins (and this is true whether you bought them or mined them) you’ll need to protect them with cold storage. The bitcoin wiki recommends that you keep your mined coins on a protected USB drive, a paper wallet, a bearer item, or a hardware wallet. Here’s a breakdown of each of those methods:
· USB is self-explanatory. Move your coins to the drive, and then keep the drive offline until you’re ready to sell or spend.
· A paper wallet generates private keys for owned cryptocurrency, but is not very safe from hackers unless it has top-notch encoding.
· A bearer instrument is a real-life equivalent to the coins you own, such as a physical bitcoin. It contains a private key and the coin’s public address. It also makes for safer offline trading.
· A hardware wallet is much more secure than a paper wallet. It’s a small device that offers safe and secure coin storage.
A word of advice: whenever buying cryptocurrency, it’s a good idea to use multi-authentication and multi-signature transactions. Multi-factor (MFA) uses several methods to identify you, and multi-signature ensures your funds can’t be spent unless everyone signs.
Know Your Scams
Sometimes keeping yourself safe is as simple as knowing the enemy. Could you recognize a real exchange from a fake one? What about a real cloud mining service versus a fake one? There are key warning signs to help you identify scams.
A fake cloud mining service will have the same descriptions and look of a real cloud mining service. The first step to determine a site’s legitimacy is to look at Google reviews. These can be faked of course, but this is a good way to get an idea about the company. You should also determine how long they’ve been in business and what guarantees they offer. If in doubt, walk away because a fake mining service will ask for “mining fees,” but will never actually mine for you. And, there are no established laws protecting you from such fraudulent activity.
A fake exchange can be determined using the same method; however, there are far too many reputable and notable household name exchanges to bother with one that seems new or sketchy. A real exchange service will have left its mark on the web, including with pages on Crunchbase and articles/reviews on tech websites.
Additionally, you should never opt into an investment that promises to double your money. They want you to pay a fee, and they will steal your bitcoins. These are known as flipping schemes. If it sounds too good, it probably is. Your best bet is to stick to websites that are established and proven to deal in best practices, and also don’t keep your coin anywhere it’s not encrypted and secure.
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