New to Blockchain? Here are 5 Tips to Stay Safe while Investing
A blockchain is a decentralized ledger that records transactional information. Public blockchains are open source, meaning anyone can view and contribute to the underlying code. This means that the data stored on public blockchains are generally verifiable and easily auditable. Cryptocurrencies use public blockchains as ledgers to record all transactions in their networks.
Cryptocurrency wallets store and manage your cryptocurrency holdings recorded on a blockchain. Wallets typically have an address, which is a string of random numbers and letters you can give others so they can send cryptocurrency to you. Your wallet also has a private key or access token that allows you to view what’s contained in your wallet (coin types and amounts) or withdraw it (transferring coins out of the wallet).
A wallet could be compared to having an email account—you can receive email from anyone with your email address but only open it with your password. Anyone with access to both pieces of information would be able to check emails from this account or send them using its credentials. Wallets track how much cryptocurrency moves in any period of time, and because of this, they are extremely important to cryptocurrency markets.
Do Your Research.
One of the best things you can do to help keep yourself safe is research. Do as much research as you can on cryptocurrencies, teams behind them, and exchanges that allow you to buy or trade them.
There are a variety of resources for researching different cryptocurrencies. What are the team’s backgrounds? Where does cryptocurrency have a strong community? Is it technologically sound? Does its price make sense given what’s happening in the market? Who else is working on this problem, and how far along are they?
Don’t Invest What You’re Not Ready to Lose.
There are always risks to investing. The crypto market is no exception. So before you invest, make sure you’re aware of the risk and won’t be devastated if something goes wrong. Don’t put more money into cryptocurrency than you can afford to lose because there could be a sudden downturn in cryptocurrency value that causes you to lose your funds quickly.
If this happens, will you be able to keep up with your financial obligations? If not, then it might not make sense for you to invest until later. You should also consider how much money you need for basic necessities like groceries and rent before putting any money into cryptocurrency.
The reason why it’s risky is that some people lose everything they have because they were unaware of what they were getting into or made bad decisions while investing their hard-earned money in cryptocurrencies like Bitcoin or Ethereum.
This article is here to help prevent that from happening! We don’t want anyone’s life savings being lost due to ignorance, so please read this article carefully before deciding whether or not investing in blockchain technology makes sense for YOU right now (or ever).
Use cold storage.
A simple way to keep your crypto secure is by using cold storage, which is keeping your crypto on a device that’s not connected to the internet.
Cold storage can be used in two ways:
- Software wallets like Mycelium, Electrum, or Jaxx can be stored on a desktop computer or USB stick and work offline. They’re easy to use, and you can retrieve your crypto easily if needed, especially if the cryptocurrency prices soar. However, they are not 100% safe because you can still get hacked if someone accesses your device or steals it.
- Hardware wallets such as Ledger Nano S and Trezor are physical devices that allow you to store your cryptocurrency offline and make transactions online. You have to plug them into a computer when making payments online, but otherwise, they stay disconnected from the internet. This makes them much more difficult for hackers to access than software wallets.
Be careful of phishing scams.
Phishing attacks occur when a scammer poses as another person or organization, hoping to trick you into giving them your personal information. The most common type of phishing attack occurs through email, although scammers can also use social media platforms to distribute their messages.
Phishing emails will often ask for your password or credit card information and will sometimes link you to fraudulent websites that appear legitimate. Before clicking on a link in an email or entering any login information, make sure the website is legitimate and not a decoy site created by scammers.
Verify All Addresses and Links Before Clicking.
It’s easy to click a link and end up on the wrong site, giving scammers valuable information. Be sure to double-check all addresses before you click them. In addition, it’s easy for someone to make a fake website that looks legitimate by changing just one letter of the address.
Scammers do this all the time–for example, they might make a fake exchange out of an authentic one by changing an “n” into “m.” A good way to check for typos is to look at the domain name in detail (the entire URL). Also, if available, enable two-factor authentication (2FA) on your exchange account as it adds another layer of protection against hackers.