Is investing in cryptocurrencies safe?

 

 

More people than ever are interested in investing in cryptocurrencies. Even criminals are.

According to a report from Crypto Head, a cryptocurrency news organisation that examined current patterns in cryptocurrency crime using data from the Federal Trade Commission, reports of bitcoin crimes have risen 312 percent year on average since 2016. These crimes can range from people falling for cryptocurrency investment scams to hackers taking the currencies of investors.

 

The Things to Think About Before Buying Bitcoin

First things first: Your investment in Bitcoin is not secure against price changes.

A volatile investment is bitcoin. Don't invest in Bitcoin, or any cryptocurrency for that matter, if you're seeking for a "secure" investment with guaranteed profits. The cost of one Bitcoin has changed during the most recent few months, ranging from $30,000 to $60,000. Not all cryptocurrencies are as volatile as Bitcoin, and some smaller coins can be more riskier

 

Don't lose sleep over huge movements because these assets are quite unpredictable, advises Dan Herron, a CFP at Elemental Wealth Advisors in San Luis Obispo,

For precisely this reason, experts advise keeping any cryptocurrency investments to less than 5% of your whole portfolio.

 

What Risks Are Inherent with Bitcoin?

The potential of fraud and hacking is the primary security worry for many people when it comes to investing in Bitcoin, as it is with any other digital activity. According to data from the Federal Trade Commission, cryptocurrency crimes are increasing and between October 2020 and March 2021, they caused a median loss of $1,900 per report.

 

According to the FTC, scammers frequently ask for payment in cryptocurrencies or send unsolicited proposals to help you make money or increase your holdings. Anyone who demands payment in bitcoin is a likely sign of a fraud, the agency warns. Avoid any unsolicited offers linked to cryptocurrencies and instead conduct your own study and buy your coins directly from a trustworthy exchange.

 

Initial coin offerings (ICOs) for counterfeit cryptocurrencies are one more kind of frauds to watch out for.

An initial coin offering (ICO) is when a cryptocurrency is made available to investors prior to going public (much like the initial public offering of a new stock). However, these new coin offerings can occasionally be fake, tricking investors into investing in a cryptocurrency that doesn't really exist.

 

Before investing, always do your homework on cryptocurrencies. If something seems too good to be true, it most likely is. As part of your study, read the project's white paper and look into the founders. It makes sense for the majority of investors, and especially for newcomers, to remain with well-known, well-established coins like Bitcoin or Ethereum.

 

How to Safeguard Your Bitcoin?

To steal people's cryptocurrency holdings, hackers can access personal cryptocurrency wallets or compromise entire cryptocurrency exchanges.

Because of this, it's crucial to store your cryptocurrency in a secure location and adopt basic online security practises.

 

Hot wallets are secure, still-online storage for your funds that are provided by cryptocurrency exchanges and other parties (and therefore still susceptible to hacking). Cryptocurrency is not FDIC-insured like bank money when it is stored in a wallet or on an exchange.

Make sure you trade and store your cryptocurrency on a platform that offers strong security precautions, such as retaining a sizeable portion of holdings in its own cold storage and requiring users to provide two-factor authentication. In the event of theft or hacking, certain exchanges may even have private insurance plans.