If you have found yourself eager to delve into the exciting and emerging world of cryptocurrencies, you have undoubtedly questioned the security and safety of this investment.
This budding market has garnered a ton of attention all over the world due to how much money investors have managed to make off cryptocurrencies. Additionally, it got a ton of attention considering the fact that it managed to disrupt the global financial markets, offering up solutions for so many problems that have long been left unmanaged.
Still, one of the biggest questions on everyone’s mind is how secure is this large and mostly unruly market? With little regulation thus far, potential investors continue to voice concerns over the security and safety status of cryptocurrency.
Here are some things to keep in mind but before that, you can check out our simple guide to 10 simple rules for keeping your cryptocurrency safe.
Cryptocurrencies, by design, are secure.
Built on a technology called the blockchain, cryptocurrencies are essentially designed to be highly safe and secure. This blockchain is basically a ledger that has a mass record of any given cryptocurrency. The decentralized and distributed nature of the blockchain offers significant protection against hackers, as they are unable to target a single computer server (or a small number of servers) to access customer information.
Unlike the classic methods of record-keeping ledgers like books or computer programs, the blockchain was specifically created to be decentralized which greatly reduces the possibility of data tampering. Each block (data piece of the chain) is also extensively verified by a network of computers, thus creating reliable data within the chain.
Each digital asset is also built using what is described as military-grade cryptography, offering significant security advantages over traditional banks and credit card companies. Cryptography, combined with the decentralized nature of the cryptocurrencies, offers their owners much greater identity theft protection than they are granted within traditional financial and banking institutions since the customer’s real name and physical address are never used.
Instead, each cryptocurrency owner is identified by a series of 26-35 letters and numbers. This number cannot be accessed unless a special digital password – known as a “private key” – is used to initiate and validate the transaction. This makes them highly safe, secure, and virtually hack-proof.
Cryptocurrencies are secure enough that banks are using them.
Major banking institutions like Goldman Sachs, Morgan Stanley, and so many others have begun delving into the world of crypto, giving them a much-needed vote of confidence. If they are safe enough for some of the most regulated institutions on Earth, surely we can consider them safe and secure enough for the average investor.
Many banks, large funds, and billion-dollar conglomerates have also invested in cryptocurrencies, buying into them while they are still affordable. It is only a matter of time before banks begin offering crypto services and products to their clients, as this is a rapidly emerging market with a ton of demand.
Institutional demand has also skyrocketed on cryptocurrencies, with major companies like Tesla, Square, and many others rushing in to buy in on crypto which suggests that this market will be around for a long time. This is particularly noteworthy considering the fact that these institutions normally have very measured and thought-out investments, with a lot of work going into each of their financial decisions.
So, what are some of the threats that cryptocurrencies are currently facing?
The biggest threats to the world of cryptocurrencies are hackers and scams, both of which threaten peoples’ investments and coins.
You should be ultra wary of any setups that promise high returns on your investment in a manner that seems unreasonable and unrealistic. Moreover, giving out things like your private keys and addresses may very well result in your cryptocurrency being stolen. Another type of scam that has become common in the crypto market is phishing scams that target people’s passwords.
If you are ever sent a link or a message that prompts you to input your account details, passwords, or any sensitive information, know that you may very well be handing over the keys to your crypto. Other scams that have plagued the market include fake IRS notices that prompt investors to pay unreasonable amounts of money because they own crypto. You should stay wary of anything you receive via email, and rely on properly addressed letters and communications.
In conclusion, we find that if you take the few additional steps required in order to make sure that your crypto is secure, you can set yourself up for a safe investment.
From basic things like not sharing your passwords and private keys, to more detailed research being done on the specific type of exchange to select and which wallet to sign up to, these minor remedial measures may save you a ton of money (and headaches!) down the line.
Ultimately, your best line of defense against scams, fraud, and losing your cryptocurrencies is to make sure that you are well educated about this new and emerging market.