The market today is littered with tonnes of cryptocurrency enthusiasts who have bought into crypto, many substantially. Unlike buying a company stock, or investing into precious metals – ownership of cryptocurrencies is not by name or title, BUT knowledge. For instance, as long as you own your private keys, you can access your Bitcoins.
Needless to say, there are no shortage of people losing access to their cryptocurrencies because they lost access to their private keys, or the exchange they stored their coins in went bust. There are of course people who are intelligent enough to store their cryptocurrencies in hardware wallets – but not too careful when they decided to trade their crypto for cash with an untrusted person.
Here’s what we think you should be doing, to hold on your cryptos (and your life!):
Privacy is security
Crypto – it’s probably one of the most engaging and popular topics out there today. Telling someone you have invested into Bitcoin when it was only US$10 probably impresses them as much as making them envious. While it’s all fine and good when you’re with friends, experts say it’s generally not a good idea to “flaunt” your newfound wealth to anyone you just met, let alone close friends.
While cryptocurrencies are often stored in secured devices which only the owner knows – it also represents a huge risk to the owner because it’s not secured by a third party (i.e. a bank) which provides an extra layer of security. For example, if you have money stored in the bank, the bank’s job is to secure your money from anyone who might want to steal from you. As such, while you may be holding a very secure crypto wallet device, you are not immune to threats or theft. Best to stay humble, and “hush hush” about it.
Trade on regulated exchanges; when not trading, store in hardware wallets
Early day crypto traders are all too familiar with the Mt Gox incident which saw the collapse of not only the biggest Bitcoin exchange (at that time), but the dramatic collapse in Bitcoin prices as well. To bring this into perspective, since then, many more exchanges have gone bust, along with their customers’ funds.
Perhaps the rise of decentralized exchanges (DEX) is one solution, as users now no longer need to trust another party to keep their funds safe. However, at least for now, there’s an increasing amount of “regulated exchanges” in the market (such as Liquid and Gemini), offering not only safety for your funds but are secured by insurance as well. We might add that the habit of storing tokens on exchanges should be totally done away with. Instead, when not trading, one should withdraw all their tokens into secure hardware wallets, offered by reputable brands such as Trezor or Ledger Wallet. It is the only way to be truly secure and have peace of mind.
Getting in early, and making money on cryptocurrencies is good – and kudos to you if you already did. However, the long game is all about safely securing your digital wealth. This means, not trusting anyone else BUT yourself. Stay safe, stay humble, and hopefully we’ll see you on the right side – when the market starts to rally once again?