Cryptocurrencies are more popular than ever, not without reason, because many see it as the future of money transactions for home and abroad. This is developing new crypto exchanges, but also new apps and hardware to store all coins as securely as possible. However, in order for all cryptocurrencies to actually remain in their own inventory, security precautions should be taken.
What are cryptocurrencies?
Cryptocurrencies are a digital payment system that banks do not need to verify transactions. The transactions are done peer-to-peer (from user to user). Since these are usually decentralized systems, this is possible worldwide, and always under the same conditions. But instead of physical money, it is digital, which is also not exchangeable in physical form.
In order for transactions to be verified, each of these transactions is recorded as a digital entry in a database (the so-called blockchain). The own stock is also recorded pseudoanonymously in a database, regardless of whether this stock is stored in a wallet or at a crypto exchange.
How secure is the system?
Cryptocurrencies are mostly based on blockchain technology, this describes the “database” in which transactions (as blocks) are stored together with time stamps. The technological process is extremely complex, but also very safe. No hacker will ever be able to hack the Bitcoin blockchain. It is simply impossible, because every connected computer verifies each other and a manipulation is immediately noticeable.
However, a security risk is the crypto exchanges, where currencies such as Bitcoin Ethereum and others can be bought and traded. These exchanges are not automatically dubious, but no one should trust them completely. It is much better if the coins are transferred to your own hardware.
It is not uncommon for companies in the industry to have already lost money due to hackers. in 2018, it hit Coincheck with about $534 million and BitGrail with a $195 million loss. According to Investopedia’s records, these are also said to be the biggest hacks. In addition, there is still a sum that is not known, but users have lost through phishing.
How is safe custody possible?
According to experts, investing in cryptocurrencies is also one of the riskiest options. However, if you are prepared and aware of the risks, you can make an investment with a clear conscience.
Information about stock exchanges
If a cryptocurrency is to be bought, then there is only the way through the exchange. It should be informed about the providers, because according to Bitcoin.com there are over 500 exchanges to choose from. Some of these exchanges have now become large, so in principle everyone knows them. Nevertheless, experience reports should be read and consulted with experts.
Having all the coins in one app or on an exchange is certainly a risky option. It is also risky to invest the entire budget in just one cryptocurrency. At the same time, it does not always make sense to invest exclusively in a cryptocurrency – as with stocks, the budget should be scattered.
Create a hardware wallet
Probably the safest method to store cryptocurrencies is a hardware wallet. The three largest manufacturers in this area are Ledger, Bitbox02 and Trezor. These are similar to USB sticks, but have encrypted software and remain disconnected from the Internet and are therefore inaccessible to hackers.