When extra funds are parked in the form of investments, how secure the investment would be in the long run is something that we always pay attention to. However, with a surge in the inclination towards cryptocurrencies as an investment option, its security is something that remains the talk of the town. Well, one thing is for sure – cryptocurrencies do not promise the investors of the same level of security as banks do. Banks are regulated by a central body which is why there is always some security associated. On the other hand, cryptocurrencies aren’t tightly regulated. This brings us to the question that bothers many – how secure is cryptocurrency?
Before making up your mind to invest in cryptocurrencies, it is very important to be well-acquainted about its security. Ultimately, nobody would want to lose funds, right? What many of us are aware of is the fact that cryptocurrency transactions are secure as a result of a two-factor authentication process. Despite this security, the cryptocurrency market is associated with certain risks. It is because of these risks that investing in cryptocurrencies does not convincingly fall under safe investments. Have a look –
- The risk associated with the exchange involved – In the case of cryptocurrencies, the funds and crypto coins are readily available for transactions in one single location. This is exactly what catches the attention of the fraudsters. The situation is even more alarming because this kind of exchange hacking is not confined to other parties alone. It is a common scenario to find employees and even exchange founders indulging in wrong practices.
- Personal assaults – With so much information available out there, it has become a lot easier for criminals to attack the ones dealing with these digital currencies. SIM Swap assaults that bypass 2-factor authentication, Email phishing attacks – you name it and the cryptocurrency market has seen it all. Now, this is a major point of concern, without a doubt.
- Storage – Yet another risk associated with cryptocurrencies is the manner in which they are stored. A good chunk of this is backed up on local devices. This further paves the way for a range of consequences – the PIN/Password is forgotten and being lost or stolen, to name a few. What investors are usually not aware of is the consequence that follows as a result of local storage. It is very easy for someone on the other side to track you, misplace the data and even go to the extent of stealing it.
- Distributing assets to the beneficiaries – In addition to our funds being safe in banks, there is nothing much to worry about when it comes to distributing the assets to the beneficiaries. We have a nominee to whom the generated wealth can be given in case of unfavourable and unavoidable circumstances like that of death. But, when investing in cryptocurrencies, what investors usually do not consider is – what would be the status of the generated wealth had there been situations like death or incapacitation. How do we maintain the accessibility of funds by future generations? This is worth making a note of before you step into the world of cryptocurrencies. Getting in a lawyer and having a will made is an ideal option to consider.
Now that we are well aware of the risks posed by the cryptocurrency market, considering how unregulated the market is, here are some measures that come in handy to ensure that the transactions pertaining to the cryptocurrency market are secure, at least from your end.
- Research – Every single penny that you plan to invest is subject to risk. Thus, thorough research about the cryptocurrency market always helps.
- Private key – The private key holds a lot of importance as it plays a pivotal role in the completion of transactions. Keep this key to yourself and do not share it with anybody.
- Passwords – In case you have several accounts, make sure to use strong and different passwords for each one of them.
- Storage – As the storage aspect of cryptocurrencies is attractive for fraudsters, make sure that you store them safely. A digital wallet is the best way of doing so.
- Trustworthiness – Engaging with trustworthy cryptocurrency wallets, exchanges, brokerages, and mobile apps would keep your investments safe to a large extent.
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