Knowledge base

How to Properly Protect Your Cryptocurrency?

The digital asset market attracts investors with its novelty and distinctness from traditional financial markets. Its main allure is the opportunity for quick profits. However, it's crucial to remember that cryptocurrencies are complex and unpredictable assets. In this article, we discuss how to ensure the safety of your virtual coins in purchasing, storing, investing, and trading.

Methods to Protect Digital Money:

  • Purchasing

    Buying cryptocurrencies is becoming easier every day. Today, you can purchase digital money on centralized* and decentralized** exchanges, through cryptocurrency ATMs, on P2P markets***, and elsewhere. Each of these options has its advantages, disadvantages, and varying degrees of security. Lately, investors are increasingly opting for centralized exchanges, known for their good reputation and ideal combination of attractive conditions and security. The main argument in favor of centralized exchanges is their enhanced regulation and adherence to anti-money laundering principles. Yet, many crypto investors consider decentralized exchanges with audits as the most reliable way to protect their digital assets.

    *Centralized exchanges are digital platforms organized similarly to classic stock exchanges. They are managed by specific legal entities responsible for the platform’s proper functioning and the safety of users’ funds.

    functioning and safeguarding user funds.

    **Decentralized exchanges are online applications for trading virtual assets, where exchanges and other operations are conducted through smart contracts rather than a centralized trading system.

    ***P2P markets are platforms for trading cryptocurrency between users.

  • Storage

    After purchasing virtual coins, it’s important to choose a safe storage option. Most commonly, there are two prevalent methods. Some investors prefer independence and decide to become their own reliable "bank vault." In this case, they use cryptocurrency wallets, the features of which you can learn about in one of our articles. Others decide to entrust the storage of their cryptocurrency to exchanges. However, it’s important to note that if your assets are stored on a cryptocurrency exchange, you will not own the keys to the wallet.

  • Trading

    And for dessert, a few tips on how to secure your cryptocurrency during trading:

    • Choose a digital asset and analyze the market: expert forecasts, coin behavior, growth prospects, etc.
    • Understand potential risks and account for them in the future.
    • Before settling on a specific cryptocurrency exchange, thoroughly research its history.
    • Choose an investment strategy that suits you: long-term or short-term investments.
    • Familiarize yourself thoroughly with trading tools. This will help in identifying trends and predicting the behavior of virtual coins in the future.