How to Keep Your Crypto Safe and Avoid Common Scams

is crypto safe

Cryptocurrency is one of the hottest investment opportunities, but it comes with its own set of risks. This relatively new asset class is volatile and prone to roller-coaster price swings, and it has no government or central bank backing, making it susceptible to hacking and scams. If you’re thinking about investing in cryptocurrency, learn how to keep your money safe and avoid common scams by following these tips:

Don’t invest more than you can afford to lose

Because of the extreme volatility of cryptocurrencies, they should be kept as a small percentage of your net worth (most experts recommend 1-5 percent). In addition, many people make the mistake of overtrading. This can lead to huge losses and is very risky. Instead, try to stick with a buy-and-hold strategy, where you purchase your assets and hold them for years.

Don’t fall for get-rich-quick schemes

There are a lot of scammers out there that promise to turn you into a millionaire overnight with cryptocurrency investments. These are almost always Ponzi or MLM schemes and should be avoided at all costs. If it sounds too good to be true, it probably is.

Don’t use hot wallets

Hot wallets are web-based digital storage methods that can be hacked. They’re also a common target for ransomware attacks, which can see your entire portfolio locked in exchange for a payment. The best way to avoid this is by using cold storage solutions such as hardware wallets.

Don’t store your crypto on an exchange

It’s tempting to keep your cryptocurrency on the exchange where you bought it, but this is a big security risk. Only keep your crypto on an exchange if you plan to trade it regularly and only in small amounts. You can mitigate this risk by using two-factor authentication on all your accounts and storing your crypto in a secure wallet, such as a multi-signature wallet or a cold wallet.

Never share your private keys

Your cryptocurrency is only as safe as the method you use to store it. Your private keys are a long string of characters that encrypt and decrypt your crypto transactions, and they should be kept secret. Never share them with anyone, and always backup your wallet seed words on paper, in a safe location, or on a hard drive that’s disconnected from the internet.

Don’t get caught up in hype

Cryptocurrencies are often subject to investor hype, which can see prices soar and then crash. This can be especially dangerous for lesser-known coins and “joke” currencies.

Another thing to be aware of is that your crypto is not insured in the same way as a traditional regulated investment space. If the company storing your crypto gets hacked, you won’t have any recourse to recover your funds. To avoid this, only store your crypto on reputable exchanges and consider a cold wallet option if you’re holding significant amounts. Also, don’t save any crypto-related files on your computer and be wary of opening suspicious emails or direct messages.

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