February 8, 2023

How to trade cryptocurrency safely

In less than 10 years of existence, cryptocurrency has come a long way from a strange contraption to the main the hero of the headlines of the leading media. The blockchain technology underlying the cryptocurrency has gone even further and is now often used far beyond financial transactions.

All this attracted a lot of attention to trading.cryptocurrency. The latest rise in the price of Bitcoin, to some extent, opened the eyes of everyone who still doubted what Bitcoin is - the gateway to tomorrow's world or another Ponzi scheme. The incredible fall that occurred with Bitcoin just a few hours after this take-off scared many people and made them sell their crypto assets in a wild panic. However, in fact, everything that happens can scare only absolute beginners in the field of cryptocurrency, as more experienced traders remain completely calm and just buy on the fall. After all, they have observed this situation many times.

Such price swings can multiply the cost.your investments or turn them into meaningless numbers in just a few hours or even less. The number of exchanges that provide trading services is so great that sometimes the exchange rates they offer can differ by hundreds of dollars from each other. Some exchanges can simply explode, and in this case, in order to anticipate such a situation in advance, a lot of experience or inner flair is needed.

In fact, all this makes cryptocurrency trading very attractive, but also very risky. Here are some basic rules that will be very useful for beginners.

How to invest

First, you need to choose what to invest. There are many people who offer their advice in this regard, and sometimes their recommendations are very useful. However, professional traders insist that no one should invest their money based solely on someone’s words.

"In order to understand how much existscryptocurrencies, just look at the CoinMarketCap data. In addition, their number is likely to increase. Some of them are well-established projects with their own community, others are just tokens in someone’s ICO, others are just new projects that have not yet received wide publicity, and, finally, there are many scammers among them. To distinguish some from others, some experience is needed, ”says Svetlana Geller, founder and CEO of the Livecoin cryptocurrency exchange.

“You can not rely on rumors heard somewhere on the Internet. Each responsible trader must conduct a serious study of where he is going to invest his money. ”

Professional traders support thisopinion. Sometimes an inexperienced trader simply cannot distinguish advertising from real analysis. In any case, before investing, it is necessary to study in detail the selected coin or currency, as well as its potential and technical nuances. This measure, taken seriously, can save a novice trader from losing all his money.

How much to invest

Another question that most professional traders hear from their less experienced colleagues is how much they should invest in this or that coin.

And although this question may seem somewhat frank, most professionals know the answer.

“When it comes to investment, the main thingthe rule of thumb is quite simple: invest as much as you can afford to lose, ”says Svetlana Geller. "This rule will reliably protect you from all serious consequences if the investment is unsuccessful, but, on the other hand, if the coin of your choice starts to rise, you can quickly multiply your money."

This rule is not limited to cryptocurrency trading, it comes from traditional exchanges. When used wisely, it has never failed anyone.

Exchanges and Wallets

When a newcomer to the dense comes tocrypto industry, he can hear a lot about wallets and exchanges. Most of the proposals in this regard have both their fans and opponents, and each side can explain why she loves or hates this or that service.

However, if you still purchased cryptocurrency, then you can handle it in several ways.

The safest way, and everyone agrees with this,This is the storage of crypto assets offline in the so-called “cold wallet”. In fact, it is a fully protected flash drive that protects your cryptocurrency from unauthorized access in a variety of ways - from cryptographic passwords to biometric identification.

However, this method is only suitable for investors,who rely on long-term investments and do not plan to use cryptocurrency daily. If you plan to use such assets often, the “hot wallet”, which is an online copy of the “cold wallet,” is better for you. However, in this case, there is a risk that someone might enter your online wallet.

That is why most experts recommend using both methods, storing some of the assets, a kind of “operating amount” in a “hot wallet”.

Also, cryptocurrency storage services are offered.exchanges. Each of them offers some additional security measures, such as two-factor authentication, or something similar, in order to reduce the risk of transactions with digital currencies.

However, this method is much more dangerous than it seems at first glance.

“Perceived safety and objectivesafety is two completely different concepts. Perceived security can be achieved by numerous account protection mechanisms. But actually it basically just interferes with the work of the account holder. I believe that a google authenticator with one IP address in its whitelist (the VPN that you use to access the exchange) will be enough. With such protection, your account will be hacked only if the criminal has full access to your PC and smartphone, which creates almost insurmountable difficulties for the Internet criminal. You can create ten passwords and protection levels, but none of them will be as effective, ”says Svetlana Geller.

And although exchanges take a large share of responsibility for the money of their customers, it is the customers who are responsible for the safety of their savings in this regard.

“Always use unique passwords, protectyour e-mail using multi-factor authentication, etc., you already know all this. Ninety percent of all hacking is done through access to your email, changing the email address of your account or trying to reset your password. Also pay attention to your smartphone, especially if it is Android with authenticator installed Google. Ideally, you should buy a cheap smartphone specifically for your financial activities and limit your authenticator Google. These two simple tricks will almost 100% protect your assets from hacker attacks. ”

But even using all security measures, there is the likelihood of another problem - the exchange will burst.

how discover, what exchange soon will collapse

The safest way to save your investmentfrom the collapse of the exchange - it's just to keep them away from any exchange. However, it is not always convenient to constantly send the currency back and forth, in addition, it will entail transaction fees, which can amount to a good amount. For this reason, many people save a certain operating amount on the balance sheet of the exchange.

Again, there are a few basic rules to follow.

It would be unreasonable to keep all assets in onelocation, be it a wallet or an exchange. Portfolio diversification can hedge it against risks associated with changes in the exchange rate and the technical problems of online services.

And yet there are a number of signs that indicate that not everything is in order with the exchange.

“There is no exchange in the world that neverexperienced technical difficulties. Sometimes they simply become victims of numerous DDoS attacks, ”says Svetlana Geller. “However, if technical difficulties occur too often, this could be an alarming sign. This is due not only to access to the website of the exchange, but also to delays in the withdrawal of funds. "

After the terrifying failure of the Mt.Gox in 2014, the community became more cautious about online exchanges, because then the exchange customers lost thousands of millions of dollars. This has made many more demanding of other exchanges. Nevertheless, it is customary to trust well-known and reputable exchanges.

"Number of users, daily volumesbidding and other open data is an excellent identifier of whether a exchange is reliable or not, ”says Geller. “However, it is sometimes useful to carefully review customer reviews.”

Despite the fact that bitcoin, like altcoins, (ed.: in the world of traditional finance) considered too risky asinvestment assets, trust in this case is a purely technical issue. When it comes to the human factor, the only real argument in favor of the investment is whether the potential investor will trust the currency in which he intends to invest, and whether he will trust the exchange and wallet that he intends to use.

The secret to successful traders is that their trust is always well-founded.