The rise of digital currencies over the past decade or so has been nothing short of fascinating; yet we’re only just beginning to get to grips with the best ways to maintain and protect our online portfolio.
A large part of the challenge boils down to awareness. It’s easy to forget how recently these alternative financial systems have been created, which also means that the protective measures in place to protect users, platforms and trades are also in their relative infancy. Digital currencies come with an unprecedented set of challenges and threats, so it definitely pays to read up on the most common dangers facing users today.
As you might expect, hacking is a big concern for online platforms across the board. Virtual currencies are a very popular target for cyber-criminals, especially when you consider the relative ease with which hackers can conceal paths of entry and erase any footprints without being detected by a centralised bank or government watchdog. You may have also recently heard about the strange case of Canadian exchange Quadriga CX earlier this year, whereby the founder of the company died suddenly, leaving users with no way to access over $135 million in cryptocurrency reserves.
Such challenges are just a quick indication of the potential threats facing users and platforms in today’s online world. With that in mind, we’re here to run through some essential tips to keep your digital currencies secure at all time – let’s get to it!
Do your research
As the market for digital currencies continues to grow, so too does the range of online exchanges, e-wallets and financial portfolio options available to choose from. It might sound like common sense, but it’s essential to find a reliable vendor that has already built a fantastic reputation among its existing client base before you register and start depositing funds.
Steer clear of any companies that do not have a strong positive reputation, particularly those offering sign-up offers that seem too good to be true. In many cases, enticing promotions and attractive features are used as a smokescreen for malware agents. It also pays to do as much research as possible before deciding on the right e-wallet or exchange for you.
Quadriga CX is a prime example. Even before the tragic circumstances that occurred earlier this year, it was already plain to see that the company was facing a range of issues in terms of liquidity and irregular activity. A quick search was enough to confirm that such a company may not be the best choice when it comes to investing and protecting your money.
Be careful when trading
If you’re thinking about getting into the world of cryptocurrency trading, remember that most of today’s digital currencies operate completely independently from a centralised bank or money transfer system. Whilst this certainly encourages greater freedom in the market, it also leaves digital currencies susceptible to quite erratic swings in the market, something that we’ve seen with currencies like Bitcoin in recent years.
As such, it may be a good idea to use your digital currency for spending purposes only, rather than getting too deep into the trading side of things. You might be surprised at just how many major retailers and services now accept digital currencies as a valid form of payment. The likes of Microsoft, Shopify and Reeds all accept Bitcoin as a valid form of payment in their respective online stores, for instance.
If you’re a keen online gamer, digital currencies are being increasingly integrated across the online casino and iGaming community. There are a few distinct advantages in using alternative forms of payment online, especially when you consider that online casino winning odds and payouts are often better compared with traditional land-based casinos. Withdrawal times also tend to be much quicker when transferring money to and from a digital currency e-wallet.
Get the basics right
There really is no substitute for spending time to build a solid and secure foundation for your digital currency portfolio. To protect against hacking, you might look at storing your funds in a ‘cold wallet’ – an offline device such as a USB, flash drive or hard drive. This ensures there is no direct threat to your online wallet and makes it virtually impossible for hackers to record keystrokes.
Passwords are also a key component, of course. Not only should you ensure that every password is secure (and complicated) enough to survive any sustained hacking attempts, you also need to make sure you are able to recall the information if it somehow gets lost or forgotten. A good way to do this is to invest in a hardware or software wallet, which enables users to recover a protected password when needed.
Other than that, make sure you feel completely confident in the service and support provided by online vendors and exchanges before depositing any funds. Whilst it takes a little more time to research and keep track of things, it’s always worth it to keep your digital currencies protected at all times.