The cryptocurrency had a roller coaster ride in 2021. There was a period where many cryptocurrencies soared to record highs. However, they experienced an immense correction soon afterwards. These digital tokens have been trading relatively flat in recent months. They cannot muster up a fierce rally like the first half of 2021.
Yet, cryptocurrency is only growing in popularity. Cryptos, and the underlying technology, have turned into a permanent fixture of the global economy. It has become an incredible digital evolution. Some may even call it a revolution. In 2021, the industry has topped $2 trillion in value. Cryptocurrency has attracted millions of armchair and institutional investors.
It is safe to say that the best is yet to come in crypto. The thousands of virtual currencies and technologies being developed will only result in terrific advancements. Of course, duds – Baby Floki Billionaire, HalfPizza, and Doink Coin – are expected to happen, and they should be avoided. However, the rest of the market is working for the common goals of innovation, solutions, and profit.
Many newcomers, feeling a case of the FOMO (fear of missing out), have been hopping on the crypto bandwagon without due diligence and research. Put simply, they are walking into a volatile world blind without a cane. It can be risky to invest in crypto unless you have a plan.
So, how can you shield yourself from financial danger? We have put together a guide of the five best crypto investing practices:
1. Know the Basics of Crypto
Can you explain what a blockchain is? Do you understand the difference between Bitcoin and Ethereum? What about cryptocurrency exchanges and storages?
Essentially, the best way to protect yourself from unscrupulous actions is to arm yourself with knowledge. Be it industry terminology or the technology behind digital currencies, there is so much to know about crypto. And, if you feel like everything is lost on you, then refrain from investing in this area. A piece of common investment advice suggests that you only invest in things you know and understand.
2. Use Strong Passwords
As cryptocurrency gains popularity, there is widespread concern about fraud and theft. Several cryptocurrency exchanges have been prone to cyber attacks, resulting in clients losing hefty amounts of their hard-earned dollars and tokens. One of the biggest vulnerabilities is weak password security.
For some reason, many people are still not using strong passwords for their accounts, whether it is for their email or shopping. The same sentiment applies to cryptocurrency. Remember that you are potentially investing a considerable sum of cash. It is imperative to utilize strong passwords as a defense against unscrupulous methods.
You need to employ better passwords that are challenging to crack. Get secure ones for your wallet, exchange account, or trading account. Generally, you want a password that has at least ten characters with at least one number and character.
3. Rely on Secure Websites
When you begin buying, selling, and trading digital tokens, be it Dogecoin or Cardano, you want to rely on websites with top-notch security. Moreover, it would help to open an account on an established company that you know is reputable, not a fly-by-night operation.
Security is accomplished with due diligence. Typically, your best options are Coinbase, Binance, Robinhood, and, if you are in Canada, Wealthsimple. If you wish to refrain from using third-party sources, you can always buy and sell your crypto by using a BTC machine. This process functions similarly to an ATM for your fiat money. First, approach a BTC machine and scan your digital wallet. Next, select an amount. Finally, deposit or withdraw your funds.
4. Warm up to Cold Storage
One of the best mechanisms to shield yourself from theft is to turn your storage cold. Cold storage is a term used to describe crypto wallets that work without an internet connection. They are physical electronic tools that store your cryptocurrencies offline. Then, when you are prepared to engage in transactions again, you can turn your cold wallet hot.
5. Invest What You Can Afford to Lose
You do not go into cryptocurrency or any financial instrument expecting to lose money or be the victim of theft. However, life happens, markets turn volatile, and criminals abound. You need to prepare for the worst-case scenarios, especially in a highly risky asset.
Therefore, you should only invest what you can afford to lose. It would be best if you never touched your retirement savings, your home equity line of credit, or your child’s education investments to buy Shiba Inu, Solana, or Polkadot. Diversify your portfolio and locate deflationary assets in today’s inflationary environment. Bitcoin, Ethereum, and the other top cryptocurrencies need to be in your portfolio.
These safe investment tips will save you. Remember, investing is the whole point of protecting your capital. Any gains are a bonus!
