Keep Cryptocurrencies safe – The most common mistakes people make when handling, storing, and trading cryptocurrencies.
If you have any cryptocurrency, you will have to adapt to a new way of keeping your money safe. You can’t keep your Bitcoins under the bed or deposit your Etherium in a bank, at least not yet. So what are you supposed to do?
Here are 5 common mistakes people make when handling and storing their cryptocurrency. How many of these are you doing?
NOT BACKING UP WALLET KEYS
Cryptocurrencies safe does not come with online banking or password reset. Instead, you have a set of private keys that allow you to access the funds in your different wallets.
You are solely responsible for keeping your keys safe. If you lose your only copy, perhaps because someone stole your laptop or mobile, you will be locked out of your cryptocurrency forever.
You must make physical copies of your private keys and keep them in a safe place, away from possible accidents.
NOT USING TWO-FACTOR AUTHENTICATION ON
CRYPTOCURRENCIES SAFE
Yes, we know, two-factor authentication is annoying. And if I’m completely honest, many of us don’t use it thinking that it’s more of a nuisance than something necessary.
But crypto exchanges are something else. Given their poor track record when it comes to hacks, you need to take all possible steps to keep your account and Cryptocurrencies safe, especially since your real money is at stake.
BLIND LOYALTY TO A CRYPTO EXCHANGE CAN RISK YOUR CRYPTOCURRENCIES SAFE
The dubious history of insecurity in crypto exchanges makes it prudent to spread the risk across multiple companies. There are plenty of crypto exchanges you can use, so why put all your eggs in one basket?
Not only is this good advice from an investment standpoint, but different exchanges provide access to different altcoins, but it also means you’ll have less exposure should the exchange get hacked, become insolvent, or run into some other disaster.
Note: You should never store large amounts of crypto on an exchange! See Error 5 for more information on this.
NOT VERIFYING THE IDENTITY OF THE EXCHANGE WHERE YOU ARE GOING TO INVEST
In the US the Patriot Act of 2001 made it a legal requirement for all banks to undergo Know Your Customer verification, and the laws also apply to crypto exchanges in the US. But also even non-US exchanges, European for example, now undertake such a process in order to comply with US and other laws for all their clients.
But here’s the catch: some cryptocurrency exchanges allow you to deposit funds and start trading without completing the verification process. However, they will not allow you to withdraw money until it is verified. Obviously, the verification process also helps prevent fraud from taking place on your account.
Therefore, if you want to ensure that your crypto assets are available when you need them, make sure that you have completed the necessary verification steps on the exchanges of your choice.
STORING CRYPTOCURRENCIES IN HOT WALLETS
Hot wallets are crypto wallets accessible via the internet, and it is that connectivity that opens them up to considerable risk. We’ve already mentioned exchange hacks, but it’s also at the whim of forced government shutdowns and some of the other problems that blockchain technology faces.
Instead, you should keep as little money as possible in hot wallets. Obviously, if you go continuously, you will need a certain amount of liquidity. But generally speaking, your cryptocurrency should be stored in cold wallets for maximum security.
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