With everyone hopping onto the bandwagon of investing in virtual currency, many end up following the pathway of others due to the FOMO factor without actually understanding as well as analyzing the industry.
Due to this reason, along with lack of patience and expecting immediate results, such types of investors end up in losses as well as mentally making a note to never indulge in the world of virtual currencies ever again.
Below are mentioned a few tips on how payments involving virtual currencies can be done carefully.
1. Research your virtual currencies
Researching virtual currencies and their types is the epitome of being safe in the world of cryptocurrency. Going head-on into the industry without knowing the basics would result in more losses than gains. Cryptocurrency exchanges are done via platforms that enable the buying and selling of these digital currencies.
There are around 500 exchanges that exist and hence choosing them based on research as well as other’s experiences would help aid in the payment of your virtual currency procedures. In order to make such payments click here to avail such a platform.
2. Understand uncertainty and volatility
Investors who make 6 figure incomes from cryptocurrency seem alluring to non-investors.
However, the truth behind the 6 figures isn’t that simple. First and foremost, investors have to endure patience as well as dramatic price swings from time to time which could either benefit you or not.
Understanding that volatility is bound to happen at some point and that should not be a demotivating factor and the mind should be even sharper in such situations.
3. Diversify your virtual currencies
Virtual currency comes with the major benefit of holding plenty of diversity. This means that if one currency is struggling, the other can be used to compensate for the damages caused by the currency in a loss.
The same applies to the payment as well. Due to virtual currencies still being in their infancy stages, virtual currencies have a higher potential of diversifying further. Having a mixture of different virtual currencies is important.
4. Careful storage
It is of the essence to make sure that your currencies are safeguarded. Digital wallets or exchange platforms are used for storage purposes.
Digital wallets and exchange platforms have their own security systems as well as technical procedures. Storage needs must be looked into before investing.
5. Smart Passwords
Choosing a strong password is very important. The passwords used for the accounts in which you keep your virtual currencies must not be used as a password for any of your other personal accounts. Hackers tend to take advantage of such users who do so.
Breach of data is something that must be avoided at all costs. This can be avoided by password rotation as well as a two-factor authentication process. This would make it harder for the hackers to break into and keep the virtual currency safe.
6. Save yourself from phishing
Mobile phishing is quite a common occurrence in today’s world. This is done quite easily as most users tend to store their digital wallets on their mobile phones.
Opening certain spam emails, as well as some suspicious applications, could also result in your wallet being hacked and your currencies being stolen away.
7. Don’t share private key
Whenever any transaction of virtual currencies takes place, validation in the form of a private key or a secret key is given to the person on either side of the transacting end. This could either be the receiver or the sender of the digital coins. The private key lies in the hands of the owner of the digital wallet.
Hackers have easy access to applications that store digital information as well as end-user devices. Thus, cold storage is one way a person can safeguard their private key. This could either be done by printing it out or writing it down on paper and securing it in someplace safe.
8. Choosing between hot wallets or cold wallets
Cold wallets involve storing the value data offline and this too comes with certain drawbacks. An active trader would be in a situation where he would be paying multiple fee amounts for every withdrawal he makes. This would be quite a disadvantage to him.
Hot wallets on the other hand can be best used if one is a retail investor. This is because the storage option is always connected to the internet and can be traded using various platforms such as PayPal and Coinbase quite easily.
9. Understanding transaction methods and processes
There isn’t a brokerage system when it comes to handling virtual currency as opposed to how we have brokers who help aid in making decisions in the stock market. The user of the wallet is accountable for the actions he or she takes and hence must understand how the transaction process works along with the methods that could be used to conduct such a process.
Concepts of cybersecurity, cloud storage, and other IT services are what the processes are based on. Thus it is important to get a basic understanding of how this functions.
10. Check the repute of the digital wallet and exchange platform
The features offered by the platform as well as the security systems used by the wallet are good enough proof on whether the wallet or exchange platform is authentic or not.
Trusted wallets would have 2-factor authentication, TLS encryption, SSL encryption, or even use air-gapped devices when it comes to dealing with storage of such currencies. If they aren’t adhering to this, the authenticity of the wallet or exchange should be doubted.
Summing It Up
Dealing with virtual currencies is quite easy, especially due to the fact that it is still in its infant stage. Thus, making sure to do your research and understanding how the systems function is vital.
Moreover, the user is held responsible and accountable for the actions he or she takes, and not taking precautions in safeguarding his or her currency would result in his or her loss.
We hope that these few tips mentioned would safeguard your virtual currencies in the best way possible.