Basic rules for safe cryptocurrency trading
Basic rules for safe cryptocurrency trading
Novice traders often pay special attention to trading strategies and the study of stock exchange tools. At the same time, they only indirectly touch upon the issues of ensuring the security of their digital assets, which is fundamentally wrong.
The success of trading directly depends on accounting and minimizing the risks that are encountered at all stages of working with a cryptocurrency: from buying and storing it to exchanging and withdrawing funds.
This article will discuss the main risks of cryptocurrency as a trading asset, as well as ways to reduce them.
Content
Investing in cryptocurrency today: risks and prospects
Is cryptocurrency trading legal?
Crypto wallets: how to store digital money safely
How to trade digital assets safely
How to reduce risks when trading cryptocurrency
Investing in cryptocurrency today: risks and prospects
Buying a cryptocurrency cannot be called a uniquely profitable investment. A lot depends on the digital coin itself, the current state of the market, the method of buying, storing and operations carried out with it. Most often, crypto investors face the following types of risks:
• threat of theft or loss of personal keys from wallets. Regardless of where to store cryptocurrency, there are risks of hacking personal wallets. If the user has lost their passwords from the storages, access to the funds will also be lost;
• tricks of scammers. Cybercriminals create fake trading platforms and cryptocurrency exchange services that allow them to obtain keys to asset vaults;
• irreversibility of operations with cryptocurrency. If the scammers managed to convince the crypto investor to invest in a dubious project, it is no longer possible to cancel the investment.
But if the crypto industry is so insecure, why get involved? The thing is that security systems for exchanges and digital storages are developing symmetrically to the development of cybercrime. Marketplaces use two-factor authentication (2FA) to verify users, and wallets are capable of generating complex passwords that minimize the chances of being hacked.
The excitement in the cryptocurrency environment is quite justified. Digital money is one of the most promising assets today. They provide absolutely any person with the opportunity to openly make a profit on their own, therefore, in many ways, taking the associated risks is quite reasoned.
Is cryptocurrency trading legal?
State legalization of cryptocurrency is a rather sensitive issue for many countries. The problem is the creation of a body to regulate the income of citizens.
In which countries have bitcoin and some altcoins been recognized today? There are more than 100 such countries, including such conservative representatives as Great Britain and Belarus. It is worth considering that the status of a cryptocurrency in the state can be different: it can be recognized as an exchange asset, one of the types of means of payment, or as an independent currency.
However, there are also countries where bitcoins are prohibited. These include Saudi Arabia, Vietnam and a number of other countries with strict legal restrictions.
Crypto wallets: how to store digital money safely
Before working with digital assets, you should figure out how to safely buy cryptocurrency and put it in electronic storage. You can use online exchangers and exchanges to buy digital coins. The rating of exchangers and the current cryptocurrency rates are available on the BestChange.com resource. In turn, exchanges provide their clients with wallets already upon registration, however, it is not recommended to use them as storage in the long term.
When faced with the question of how to choose the right crypto wallet, a novice trader must first decide what purpose he needs digital storage for. There are two main types of cryptocurrency wallets that work on different principles.
• Hot crypto wallets. These are online wallets in which assets are in the constant access of the user. It is these vaults that are used to trade, pay or receive funds. They are convenient but insecure as they can be susceptible to cyber attacks.
• Cold crypto wallets. They are analogous to a digital storage device ("flash drive"), which is disconnected from the network. To work with it, the user creates a password that cannot be accessed by third parties. Cold storage is much safer than hot storage, but if the user loses or forgets his password, the funds will remain inaccessible to him.
Hot vaults are included in the basic client packages when registering on exchanges. Marketplace security systems often prevent attempts to steal passwords to wallets. But professional traders recommend transferring assets that are not used in trading to cold wallets.
How to trade digital assets safely
Responsibility for the safety of funds in hot wallets of cryptocurrency exchanges lies primarily with their owners. The marketplace can provide only two-factor authentication of users by linking an email or phone to their account.
However, a trader can make it difficult to access their funds with a complex password. It is also recommended that you only log into the exchange account from private Internet networks, which should also be secured with a strong password.
How to reduce risks when trading cryptocurrency
The assets of traders that are directly in trade transactions are not available for theft by third parties. However, there is another danger here - insufficient trade literacy of newcomers. For example, if margin trading is available on the exchange, which occurs with the attraction of credit funds from the borrower (trading platform), then the risk of losing a large amount of funds increases sharply. Therefore, novice traders are advised not to trade on credit.
A stop-limit order is also used to reduce trading risks. It allows you to fix both the profit on the trade and the loss. Combined with a well thought out strategy, this tool can make trading more predictable.
Safe withdrawal of funds
After the end of trading operations, you should find out how to legally and safely withdraw cryptocurrency from the exchange. This can be done directly, or using online exchangers. Some large exchanges provide services of exchange and withdrawal of assets directly to the user's card. But exchange commissions for transactions are usually more expensive than exchangers.
You can withdraw funds through a reliable exchanger from your personal hot wallet. The procedure takes about 15-20 minutes, after which the funds in the selected state currency will be transferred to the trader's bank card.
Сonclusion
The security of digital assets remains a pressing concern for traders and crypto investors. With the development of technologies for storing and investing electronic money, it is possible to achieve an ever higher level of privacy of user data on the network. But first of all, the safety of personal assets depends on their owner. Therefore, it is necessary to perform any operations with cryptocurrency in compliance with simple but effective security rules.