Is Cryptocurrency Safe?

is crypto safe?

Are cryptocurrencies safe? This is a question worth asking given the recent surge in cryptocurrency trading and the government’s struggle to keep up with consistent regulations. Cryptocurrency security, or lack thereof, is likely to continue to be a pressing issue in the coming years, as a recent report from Allied Market Research projects that the size of the global crypto market will triple by 2030.

The answer on how to secure crypto is, at least for now, complex. Cryptocurrency has security risks you should be aware of before investing or trading. First, you need to know that crypto assets are still very volatile. They are very vulnerable to price fluctuations. Second, the cryptocurrency ecosystem is relatively new and relatively unregulated. This comes with many fraudsters looking to prey on newcomers unfamiliar with this new asset class.

But crypto has some security benefits that make it attractive too. In this article, we will review the main safety points that you should know before diving deeper into crypto.

Are cryptocurrencies safe, and how can you invest safely?

When someone asks whether it is safe to buy and sell cryptocurrencies, they are probably asking one of two questions:

  • Is cryptocurrency a safe investment?
    Investing in cryptocurrencies can be riskier than other assets, such as stocks and government bonds. Although cryptocurrencies are generally considered legal throughout Europe, many aspects of cryptocurrencies are not yet regulated. Fluctuating regulations can make crypto markets more vulnerable to volatility, as we saw in the summer of 2021 when China’s crackdown on crypto-related activity resulted in a drop in Bitcoin prices. With so many world governments weighing how to react to crypto’s rise, many factors could contribute to crypto’s future volatility.
    Another thing that causes crypto volatility stems from the fact that crypto is still relatively new among investors, and they may not know exactly what to do. Because crypto is more vulnerable to price changes that come from shifts in investor sentiment. Some cryptocurrencies are more susceptible to this than others, but even Bitcoin, the oldest and largest crypto by market cap, is known for its highly volatile price swings.
    If you invest in cryptocurrencies, you can reduce the risk by not buying more than you can afford to lose. There is still a possibility of losses on any given day, so be careful and consider a crypto-diversified investment portfolio.
  • Are there any security risks associated with cryptocurrencies?
    Yes, there are some security risks you should be aware of:
  1. Payments with crypto have limited legal protection. Payment by traditional debit and credit cards offers certain security features that crypto does not. For example, in some cases, you may not be responsible for fraudulent purchases made on your behalf. This is generally not the case with cryptocurrencies. If you lose money to scammers, you may not get it back.
  2. Cryptocurrency scams are common. Maybe you’ve received an email that threatens to reveal your compromising photos if you don’t pay a certain amount in Bitcoins. Or maybe you have received a suspicious message congratulating you on winning a rare NFT or a large amount of cryptocurrency. These are just a few examples of scams to watch out for. In general, if someone asks you to pay them in cryptocurrency and refuses other payment types, they are probably trying to steal your money. And if someone pressures you to pay with crypto in some other way, they are most likely trying to scam you.
  3. You cannot “take back” a cryptocurrency transaction. Many cryptocurrencies use blockchain technology to create secure, public, and non-editable transactions. This technology comes with the benefit of security, but it also means that crypto transactions generally cannot be edited or reversed after the fact. If you’re paying someone in crypto, there’s usually no customer service agent you can contact to process a refund if something goes wrong.

These are just a few security risks associated with cryptocurrencies, but others continue to emerge as the crypto ecosystem evolves. The U.S. Federal Trade Commission updates its information on scams and crypto security as it develops, so it might be worth checking it out periodically.

What is the safest way to buy cryptocurrency?

With the rise of crypto, there has been a similar increase in online exchanges and marketplaces where users can buy and sell crypto. Generally, more secure online platforms tend to ask you to prove your identity, as they follow Know Your Customer (KYC) and Anti Money Laundering (AML) guidelines.

One of the safest ways to buy cryptocurrencies is to make sure you choose a licensed platform with a good reputation. The Tokenomy platform has been protected under the Labuan Financial Services and Security Act 2010 (LFSSA), which is an official institution in Malaysia in granting investment licenses. On Tokenomy, you can invest and trade using various cryptocurrencies (such as Bitcoin, Ethereum, USDT, etc.).

What is the safest way to store cryptocurrency?

In general, the safest way to store cryptocurrency is to store it offline, so it’s safe from hacker attacks. You can store your crypto assets offline if you use a hardware wallet known as a “cold wallet” or “cold storage.” Digital wallets (i.e., “hot wallets”), which can be accessed online or on your desktop, may be more vulnerable to theft from hackers.

There are various crypto wallets to choose from, including hardware wallets offered by well-known names like Ledger and Trezor. The downside to hardware wallets is that they can be costly, and you will need a recovery seed to regain access to the crypto wallet if you lose access or misplace your wallet. Still, they probably represent the safest option right now.

What are the safest cryptocurrencies?

Simply put, there is no “safest” cryptocurrency. This does not indicate that there are cryptocurrency assets that are safer than others. Cryptocurrencies like Bitcoin and Ethereum are said to have some good security features thanks to decentralized blockchain technology. But you need to ensure the security features of other assets once again.

It should be noted here that security is part of the appeal of decentralized blockchain technology. Bitcoin was created to provide more security to buyers and sellers in transactions and avoid needing a third party.

Five cryptocurrency risks to consider before investing

Before buying or selling crypto, it’s good to understand some of the main risks of cryptocurrencies. Here are 5 points to consider:

  1. Blockchain technology is still relatively new.
    Blockchain’s cryptographic nature, a decentralized peer-to-peer network, provides several built-in security features. For example, encryption with a hash and a time stamp makes it impossible to change data in a block after it has been added to the blockchain.
    But decentralized blockchain technology is still relatively new, and users are still figuring out how best to use and manage it. Meanwhile, some criminals may take advantage of the anonymity offered by crypto to deceive users.
  1. Cryptocurrencies have very volatile price movements.
    Crypto is a volatile investment, so don’t be surprised to see its value increase or decrease significantly. In fact, the value of these assets can fluctuate up and down hundreds of percent within hours. The history of previous price movements cannot be an indicator of assessing future price movements when it comes to crypto investments. For this reason, it is better not to make crypto investments with an amount greater than the amount that is ready to be lost or use cold money.
  1. Cryptocurrency scams are getting more and more varied.
    Unfortunately, the cryptocurrency world is still rife with scams. Criminals can use fake apps, crypto wallets, and emails to lure you into handing over your private keys, giving them access to your crypto assets. NFT scams are also increasingly common, with some buyers being conned by fake accounts under fake names or where promised NFT royalties never materialize. Crypto itself can also be very vulnerable to fraud. One notable case is the Squid Game token, which prevented token holders from selling their tokens.
  1. Cryptocurrencies are still largely unregulated.
    While some countries already have regulations governing cryptocurrencies, most countries worldwide do not regulate this asset class. If the platform where you exchange or store crypto assets goes bankrupt, there is a risk that you will lose all your capital. Likewise, your assets could be at risk if criminals hack the exchange that holds your crypto. Additionally, cryptocurrency taxation is still in its infancy, and future changes could impact your investment.
  1. Diversity is the key.
    Currently, the number of cryptocurrencies is in the thousands, and many are still in the early stages of development. As with all risky investments, you are putting all your eggs in one basket is not a great idea. If you choose to invest in cryptocurrencies, it would be better to spread your investment across various cryptos.

Three tips to keep your cryptocurrencies safe

Being prepared with research and making careful investment decisions can help you avoid some of the dangers often associated with cryptocurrencies. Here are tips for avoiding the pitfalls.

  1. Research each exchange before you buy crypto.
    In the past, several cryptocurrency exchanges have experienced attacks from hackers. Consider choosing an exchange with solid security features, low fees, and ease of use. Before you trade, research the exchange and find out what users say about it. Tokenomy has an institutional-level security system with decentralized control over assets, making attacks impossible. In addition, to reduce the risk of attacks, Tokenomy limits the existence of crypto wallets that are connected to the internet. To ensure the safety of user assets, Tokenomy also provides that there is insurance that will replace 100% of your assets in the event of an attack on the platform that causes you losses.
  1. Research cryptocurrencies before investing in them.
    Read the whitepaper of the crypto asset you want to buy. The standard for any new currency, this document is designed to help you understand crypto’s use cases and scalability and creators’ plans for the future. You can also join online cryptocurrency forums to get ideas and tips to complement your own research. An internet search can also turn up helpful information about the track record and reputation of the development team behind the crypto asset.
  1. Store most of your crypto in a secure crypto wallet.
    Keeping most of your crypto in a secure wallet will protect you from theft. Using a hardware “cold” wallet can reduce the risk of losing your crypto to online hacks. Don’t forget to use additional security such as Two Factor Authentication (2FA) and back up your digital wallet’s private key.

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