How Safe Is Cryptocurrency? A Guide for New Investors
How safe is cryptocurrency and where do you store it? Check out our guide to storing crypto securely, blockchain, avoiding scams, and more.
In 2010, Laszlo Hanyecz purchased a pizza with 10,000 bitcoins. The purchase made sense then since his bitcoins were worth around $40. But today, even in our volatile market, the same coins are worth over 400 million dollars. Thus begins the intrigue with cryptocurrency. Since 2010 more people have begun to believe in the decentralized currency and begun investing in it. But how safe is cryptocurrency? How do you store it, and can you lose it? Keep reading to learn about how to avoid the scams and pitfalls that come with a decentralized currency.
How Safe Is Cryptocurrency?
Any investment comes with risk. With crypto, the first risk lies in its volatility. It can rise and fall quickly like an investment. So begin by watching the market carefully. Then scope out the best brokers or locations for crypto. Something like Fantom price could differ from Bitcoin, for example. As far as the volatility of the market goes, crypto is as safe as any investment. But as with any investment, the more risk you take, the more reward you can proffer. Thus, risking a reasonable amount make sense.
When you purchase cryptocurrency, you have a few choices on where to store your investment. Because the Federal Deposit Insurance Corp. (FDIC) does not back cryptocurrency exchanges, cryptocurrency is susceptible to theft or hacking. Furthermore, if you lose your access codes, you can lose your investment. Thus, you need a secure place to store your cryptocurrency. When you purchase cryptocurrency from a broker, your broker will automatically keep your cryptocurrency safe with their own storage system. Thus, you can avoid cryptocurrency scams by purchasing from a reliable broker. If you buy cryptocurrency through an exchange, you have more storage options.
Leave It On the Exchange
When you purchase cryptocurrency on an exchange, you can leave it in your crypto wallet on the exchange. If the exchange is hacked, however, you will lose your cryptocurrency. Thus, if you don't like the provider that your exchange uses, you can move the cryptocurrency to a more secure location like a hot or cold wallet.
Hot wallets are crypto wallets online. They run on internet-connected devices like computers, phones, and tablets. With a hot wallet, you can access your crypto from any device connected to the internet. With hot wallets, you run a higher risk of theft because you store your cryptocurrency online. Any hacker can access the cryptocurrency and steal it.
Cold cryptocurrency wallets are the most secure options to keep your cryptocurrency safe. These are devices not connected to the internet, such as a USB drive or hard drive. To access the cold wallet, you need a keycode. Thus, you run a risk of losing your cryptocurrency if you lose your keycode. You also must trust the reliability of your hardware. If the device fails or breaks, you will not be able to access your cryptocurrency.
Invest In The Future
Ultimately, cryptocurrency is an investment. It was created by people who wanted a decentralized currency, something they have control over. With decentralization comes volatility and risk, however. So, how safe is cryptocurrency? It's as safe as we can make it If you choose a reliable exchange and a safe storage method, you can rest on the fact that your investment will yield big dreams. Did you find this article helpful? If so, keep visiting our site. We seek to provide readers with helpful, educational articles daily. Read more: How to Buy PlayStation 5 in 2022