The purpose of this brief cryptocurrency security guide is to give you the necessary tools so that you can learn how to safely make money with Bitcoin. To start with, let’s take a look at the crypto landscape to see how safe it is and the types of danger involved.
The crypto world offers exciting opportunities, but can equally entail a significant level of exposure. In this guide to safe Bitcoin trading we will examine some of the main cryptocurrency trading risks and look at how you can enjoy the benefits of this lucrative market without losing your hard-earned savings.
Is it safe to invest money on Bitcoin? Absolutely, so long as you take basic precautions to avoid scammers and diversify your crypto portfolio with a variety of asset types, while implementing a mix of Bitcoin trading strategies to balance your risk to return ratio.
The crypto exchanges are characterized by exceptional volatility, as we have seen time and again, when the price of Bitcoin has skyrocketed and then dropped like a stone, sometimes in just a matter of hours. Intra-day traders can make a fortune on these rapid market fluctuations, but this type of short-term trading can also lead to devastating losses, particularly when leverage is involved.
Then of course, there is the issue of legislation. Frequently, the crypto arena has been referred to as the “Wild West” because regulators are still playing catch-up with this new asset class that has only recently emerged onto the financial stage. Is it a currency or a commodity? What are the tax obligations relating to crypto and in which jurisdictions can it be legally traded? Until we have answers to all these questions, the uncertainty brings with it a certain degree of risk.
Another aspect of the regulatory issue is the fact that there are less consumer protections in place and there is a lack of oversight, so scam artists could seize the opportunity to take advantage of unwary crypto investors.
As we have seen, the question of how safe crypto trading is, needs to take into account a wide variety of risks. Yet, there are plenty of ways to protect yourself and benefit from Bitcoin profitability.
One smart step you can take is to use two-factor authentication (2FA). This is where you add a secondary layer of security, with a phone number, email or question and answer verification method to confirm your identity before any account activity can be performed.
You should also keep an offsite backup of your crypto wallet to ensure that you don’t suddenly lose access to all your capital if your computer is stolen, lost or simply dies on you. You don’t want to a failed hard disk to mean your savings are gone forever. In fact, it isn’t over-kill to have multiple backups in various locations.
Another of our top tips on trading cryptocurrency is to diversify your portfolio. Currently Bitcoin is experiencing a boom, but if tomorrow it goes into freefall then you need to have other eggs in your basket to mitigate the hit to your savings. These days there are hundreds of crypto assets to choose from. Some are well established like Ethereum and Ripple, while others are just beginning to be discovered and you can get in on the ground floor as they slowly gain in popularity. Add a mix to wallet to create a healthy and balanced portfolio.
One of the biggest cryptocurrency trading risks comes from the bad actors in the space, scammers who exploit the anonymity and frequent under-regulation of the decentralized financial ecosystem to take advantage of less vigilant crypto traders.
First of all, a valuable piece of advice is not to use the same login details for all your accounts. Use a different email address, so as to ensure that if scammers get hold of one account, they do not have access to all your Bitcoin.
One of the most useful tips on trading cryptocurrency safely is to beware of anyone contacting you and asking you to transfer your funds, claiming to be a moderator, or a representative of the platform, exchange or wallet that is holding your Bitcoin. Check the message carefully to see that it does not differ from other communications you have received from the service provider. For example, have they sent you an email that has a different address to the usual support emails you receive from the company? Is the logo or are the branding colors on the landing page you were directed to slightly different?
It is critical that if you are not one hundred percent sure you are dealing with a legitimate request, you contact the support team directly to confirm the message came from them, before you lift a finger to transfer your cryptocurrency.
Another risk you have to keep an eye out for is hacks and one great way to protect yourself is by maintaining both hot and cold wallets. Hot wallets are extremely convenient, giving you instant access to your cash, but they are connected to the internet and therefore vulnerable to network hacks. Therefore, keeping some of your Bitcoin available in a hot wallet for more frequent use, and some safely tucked away in a safety-deposit box, in an offline, cold wallet is a great way to minimize risk.
An additional way to ensure that hackers can’t get their hands on your money is to store your private keys offline. These are used for authorizing Bitcoin payments out of your wallet and should always be stored separately, on a USB, with another copy on a different computer not connected to the web, so it can’t be hit by malware.
No guide to safe Bitcoin trading would be complete without a brief discussion of how to decide whether you are dealing with a reputable company.
Clearly, it goes without saying that you should only place your funds with a licensed and regulated platform. Here at ArbiSmart, we are EU licensed, which signals to our clients that we are regularly audited and adhere to the strictest regulatory requirements including tough data security protocols, as well as full compliance with KYC and AML procedures.
In addition, the availability of support, is another important factor in determining the reliability and trustworthiness of any crypto service provider. If all they have is a chat bot you may want to think twice, as if you have an issue accessing your money, you need to be able to reach a real person. For example, at ArbiSmart, we offer assistance 24/7, via phone, chat email, Whatsapp and all major social media channels.
You also need to check their online reputation, starting with media coverage from leading industry players like Cointelegraph, Bitcoinist, Kryptomonitor, Cryptonews, Finance Magnates and others. If there is no mention of the company anywhere, then this is a major red flag. You should also see how they are discussed on consumer review sites and check their social media presence, looking at the feedback on Telegram, Reddit and other channels that are popular among the crypto community.
So, how safe is cryptocurrency trading? The answer is that it depends on you. If you take the right precautions, beware of scammers and only deal with reputable, regulated service providers then Bitcoin trading can be a safe and highly lucrative investment opportunity.
ArbiSmart offers multiple, potentially highly lucrative revenue streams. Benefit from a secure, trusted space, where from day one, your crypto will be working hard on your behalf.