The cryptoverse can seem to be overwhelming and bizarre to new investors and traders, owing to the fact that it is exclusively a digital domain. There is no way to visit your local ATM or bank branch and withdraw a couple of Bitcoins. There is always a lurking fear in the mind of a crypto novice that the whole thing could be a scam- it might just be fake money.
However, in the digital world, those little ones and zeros hold worth– and can be quite valuable. To ensure that potential investors and traders avoid crypto scams, here are a few easy steps to follow.
No Amount Of Security Is Too Much
The best way to protect your crypto is to ensure that ownership keys on your holdings are as secure as possible. You must be the only person who can have access to the passwords. Holding a digital coin isn’t the same as depositing it in a bank, as there is no regulatory body. Thus, personal protection mandates certain measures to be implemented by individuals.
A secure wallet is one which is locally hosted on your hardware, on a password-protected computer that provides overall security. However, if you choose a digital wallet, overseen by a third-party company for its accessibility or convenience, be sure to thoroughly verify this company before moving your funds into one of their wallets. Also, don’t forget the famous saying in the crypto world- don’t put any more currency than what you’re willing to lose.
Keep Away from Pump and Dump Groups
There are people who organize and run groups on platforms like Telegram to lure investors and traders into buying a particular cryptocurrency. The group members fix a time when all of them purchase a particular coin, pumping up its value. Observing this trend, investors usually end up buying this token driven by the fear of missing out. Consequently, the organizers earn profits on the difference between a low purchase and high selling price.
While there are ways to figure out if the rise in the value of a coin is because of suspicious activities, it’s a long process. By then, the pumping and dumping activities end, leaving the investors at a loss. So, it’s incredibly crucial for people to be aware of such possibilities and not fall for them by.
Understand The Underlying Technology
It is critical to understand the underlying technology that powers cryptocurrency. Doing so prevents you from falling into any traps with Bitcoin or any other altcoins that you have chosen to invest and trade. Your knowledge of the technology need not be exhaustive. Unless you plan to set up your mining rig, some of the more esoteric points need not be understood in-depth. However, one must understand the basics of digital currencies, how they’re mined via blockchain, how they’re transferred from one party to another, and how currency exchanges and digital wallets function.
There are numerous excellent educational resources out there that can be used to gain a sound understanding of cryptocurrency. Majority of these resources are open-structure and free to pursue, making the barrier to entry in cryptoverse a little lower than you might think. Complete security in cryptoverse is not very feasible, but if you keep the above tips in mind, the chances of fraud get substantially reduced.