Cryptocurrencies are the hot topic in the world right now, generating immense demand as well as curiosity in investor circles around the world. The security of most cryptocurrencies revolves around the incentive-compatible proof-of-work distributed consensus protocol. This is run by network nodes known as Miners who are expected to honestly maintain the blockchain in exchange for the incentive. The concept, first introduced with Bitcoin’s arrival back in 2009, is used extensively around the world today.
The popularity of cryptocurrency trading across the globe is rising significantly, In a recent report, 47% of South Africans said they have planned or are planning to invest in cryptocurrencies, what is significant. Crypto trading is very much similar to Forex exchanges such as trade forex South Africa.
There’s no doubt about the immense prospect that Cryptocurrencies bring with them, serving as a useful way to move money from one place to another. Of course, there are various elements involved, such as web wallets, exchanges and processing systems are all susceptible to hacking and data breaches. Many traders have lost a fortune because of simple cracks and have their entire funds compromised. There is also complexity involved in trading in the real world where middlemen and intermediaries make the transfer of coins less-transparent for the buyers and sellers. This can result in substantial financial losses, both for the exchange or provider.
Trading bitcoin or other cryptocurrencies are becoming easier and safe nowadays. However financial Analysts have long disapproved of the concept of investing in cryptocurrencies, citing volatility as the main reason. However, due to the recent frenzy and craze revolving around cryptocurrencies, investors are increasingly getting attracted. In order to safeguard their own interests, traders should examine security features themselves before joining an exchange or purchasing a certain Cryptocurrency.
In this case, it is also essential to adopt user-end security practices as an extra layer of protection. In the article, we will discuss ten security practices for trading cryptocurrencies safely.
1. Installing Anti-Virus Software:
Common problems such as Information Theft, spoofing payment information and phishing are real threats to the Cryptocurrency world. For example, the presence of malware can easily trick a user causing him to lose a fortune. Installing Reliable Anti-Virus software can protect less-vigilante users from such cyber threats.
2. Using Two Factor Google Authenticator:
Various scams and fraudulent schemes are out there, waiting for an unsuspecting trader or investor to swindle their money. Users need to set-up a 2FA for extra security. It’s a two-step process, where the secondary verification is usually done via Email, SMS or a timed-code generated by Google.
3. Using Smart Phones Wisely:
Smartphones are almost a staple for traders nowadays, helping them to stay connected to the market. Various crypto-exchanges and firms have developed applications for both Android and iOS, allowing users to effectively trade and operate. However, scam websites and fraudulent apps which disguise themselves to appear authentic, get mistakenly downloaded by users. It is thus advised to check the file source and fellow user feedback to be absolutely sure.
4. Trading On Non-Active Exchanges:
There are several Cryptocurrency Exchanges operating in the market today. However, some of them are defunct and have not been active for extended periods of time. Users must be sure that the exchanges are actively trading with other investors before commencing. Using a defunct or non-active exchange can result in funds being frozen and non-recoverable.
5. Separating Funds:
Users are always advised to not store all of their funds in one wallet or not use only one exchange exclusively. Even though security measures and protocols have been set up by reputed organizations, the threat of data breaches and hack attacks are always present. To minimize the risk of losing all funds from a single entity, users are advised to divide their funds and use multiple exchanges and wallets for effective trading.
6. Secure Wi-Fi:
Wi-Fi security is a big issue when trading cryptocurrencies, especially at the time of using a device that has a wallet application. There have been reports of risky Wi-Fi networks with inferior security protocols which have resulted in a trader’s wallet and funds getting compromised. Using Wi-Fi connections from secure providers is one way to ensure that it does not occur. Users are also advised not to use Cryptocurrency related applications when on a public Wi-Fi network.
7. Staying Away From Fraudulent Exchanges:
Fraudulent Exchanges have websites set-up to entice a trader or investor into using their service. They appear to be quite normal and go unrecognized by the normal trader. However, on closer inspection, such websites have tell-tale signs of being a scam, such as loud colors, enticing offers, and unrealistic financial promises. Doing a simple background check and research beforehand can go a long way. Reputed exchanges always ask for identity verification and location before they accept a deposit. Fraudulent exchange, on the other hand, does not follow such rules and protocols.
8. Avoiding Pseudo Coins And Rogue Services:
There are many imposters and Pseudo coins circulating on the market, either appearing as a major coin or an ICO. It is very easy to get confused by such cryptocurrencies and can result in substantial fund losses. It is thus always advised to do thorough market research and gather proprietary details of a new Coin before investing in it.
9. Choosing Decentralised Exchanges:
Contrary to popular belief, not all exchanges are centralized. Decentralised exchanges provide a much higher level of security both from internal and external threats. The reason for this can be attributed to the fact that centralized exchanges actually store the investor’s fund. This is radically different than decentralized exchanges where no other individual can access the investor’s money.
10. Choosing Known Wallets For Storage:
It is always advised for users to choose wallets like the popular Ripple Wallet that have proven security measures and protocols in place. Below is a list of known Crypto-wallets along with some additional Security information.
There’s no denying that Cryptocurrencies have attracted various investors and traders over the past year. However, their fame has come at a cost, as antagonists use their decentralized nature for conducting criminal activities. Cyber threats are a real danger and it is up to the traders and investors themselves to protect their own interests. The above points provide solutions against a few of these attacks. However, there is still an absence of any concrete, robust and effective security solution for the Cryptocurrency market.
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