The interest in cryptocurrencies has just recently reached an all-time high. Loads of investors are starting to exhibit curiosity and willingness to invest in cryptocurrency. But unfortunately, even criminals are showing interest too.
Crimes in the cryptocurrency world have reportedly tripled in the number of reports per year since 2016. The crimes listed vary from hackers stealing investors’ coins to spreading scams related to crypto investing.
Are Cryptocurrencies Safe?
Bitcoin has the largest amount of cybercrime reports than any other cryptocurrency, but this is largely in part because of its size since it’s been around the longest. But even if you look past the reports of digital crime, Bitcoin’s safety is still often questioned when it comes to investments. It has frequently been doubted because of the frequency and scale of its price fluctuations.
Even if there has been a rise in fraud and theft incidents in the crypto market, many experts still vouch for Bitcoins security. Or at least in terms of its robust cybersecurity. They have secure blockchain technologies to thank for that.
The question right now is: is investing in Bitcoin safe? Here are a few things to note about Bitcoin’s security and keeping your cryptocurrency safe if you decide to invest.
Consider a few things before buying Bitcoin
It would be nice to start with a reminder: the money you invest in Bitcoin is, and will not be, safe from price fluctuations.
Bitcoin (and other digital currencies) is a very finicky investment. It definitely shouldn’t be an option for you if you have a low-risk appetite and if you’re searching around for a “safe” and guaranteed return investment.
To demonstrate just how much prices can vary, the price of one Bitcoin has shifted between $30,000 and $60,000 in the past few months alone. And this is only about Bitcoin; other, smaller and less established digital currencies maybe even be more temperamental.
Experts would recommend that you keep any cryptocurrency investments to no more than 5% of your portfolio. It would be safe to make sure that you have a sturdy retirement plan before diving into cryptocurrencies. Similarly to what you would do in traditional investments, it’s also wise for you to establish a solid emergency fund before everything else. And lastly, it is important to pay down any high-interest debts before investing in Bitcoin or any other cryptocurrency.
Digital currencies are very volatile investments, but crypto might be the space for you if you have a high-risk appetite. This crypto trading platform is beginner-friendly and can help you get started on your investment.
What are the risks to investing in BItcoin?
Cryptocurrency crimes are still on the rise, and they have resulted in a total loss of $1,900 per reported incident between October 2020 and March 2021.
The most glaring security concern for the majority regarding Bitcoin investing is the risk of hacking and fraud.
A lot of crypto crimes would frequently involve scammers asking for payment in cryptocurrency. Some modus also involves reaching out to send unsolicited offers that claim to help you profit or increase your holdings. Cryptocurrency or not, it would be best to avoid any unsolicited offers.
Instead, you should look around and do your own research. You can buy and trade your coins yourself using a reputable and trusted crypto exchange platform, like the BitQT App.
Look out for other types of scams too
Similar to a new stock’s IPO, a cryptocurrency can be offered to investors before it’s launched to the market, called Initial Coin Offerings or ICOs. These “new” coin offerings can be faked and used to lead investors into putting their money into a cryptocurrency that doesn’t actually exist.
Another scam example is a “pump and dump”, where a small group of investors may “pump” a lot of money into a cryptocurrency. This artificially inflates the price to trick private investors also to invest. The initial investors will then sell their shares to make a huge profit before the prices fall again.
It’s been said repeatedly, but always keep in mind that if it looks too good to be true, it probably is. Always do your research before you invest. Please read up on the project’s white paper and its founders as part of your research. Be wary of coins that have mysteriously risen a lot in value. Most investors, especially beginners, stick to established and popular coins like Bitcoin.
How can you keep your Bitcoin safe?
It’s essential to store your crypto in a secure place and practice good digital hygiene since hackers can access crypto wallets or break into entire cryptocurrency exchanges.
Hot wallets, which are secure but still online (and still prone to being hacked) is one of your options for storage. Double-check and make sure that you are holding your crypto on a platform that has robust security measures. These may include keeping a significant amount of holdings in their own cold storage.
To prevent online fraud, many experts would recommend using cold storage on an offline device that is not connected to the internet. There are still some risks with using cold storage, though, like possibly losing access to your investment completely if you forget your password.