It seems everyone wants to try their hand at investing in bitcoins, or Litecoins, or other alternative cryptocurrencies. With the value of multiple digital currencies soaring, it’s easy to see why. Value can spike within days, it teaches us about investing – when to buy, when to sell, how stocks work – and these cyber coins are a popular topic of conversation. You might not want to miss out on this opportunity!
If you want to educate yourself on the technology behind cryptocurrencies first, this video will make things easier to understand:
Two-Factor AuthenticationWhen creating an account on platforms used for buying, trading, and selling cryptocurrencies, check that you’ve set up their two-step authentication process. This will add an extra layer of protection to defend against cyber criminals trying to access your wallet. Go the extra mile by installing a 2FA (Two Factor Authentication) option from the trading platform for all your devices.
2FA will enhance your security by generating a unique 6-digit code and sending it to your smartphone, which you then use to reauthenticate your accounts. Try Google’s Authenticator app for your Android or iPhone. If you’re doing your trading from home, try this version available for desktops.
For directions on how to set up these apps so that your cryptocurrency accounts have that added security, try this guide to activating your 2FA.
Keep your Cryptocurrency from being LostPeople have “lost” nearly four million bitcoins. This can mean a number of things. Some may lose their cryptocurrency by forgetting their password or private keys, having their hard drive destroyed, or by their death. So how can you protect your coins from disappearing?
- Use a password manager. You want to keep cyber criminals out of your accounts, but you don’t want to lock yourself out as well! So remember your passwords or have a manager to remember them for you!
- Move your smartphone wallet to your desktop. Many people get their start in cryptocurrency with mobile apps. If you take keeping your coins secure seriously, move what you have purchased through your smartphone to a more stable location like a desktop.
- Backup and encrypt your wallet. Have backups online and offline of your wallet, or wallets for some of you! Depending on the value of your coins, you may want to back them up on a thumb drive and store them in a safety deposit box! Otherwise, invest in a good external hard drive and store a copy of your wallet there.
- Consult a lawyer. If the future of your cryptocurrency concerns you, meet with a lawyer and arrange to have it transferred to family or friends in case something happens to you. Just like your other investments, you want to know there will be someone to handle the disposition of it all in a way that you specify.
Don’t Fall for Fake CurrenciesWith words like ‘bitcoin’ and ‘cryptocurrency’ trending, imposters are looking to take advantage of all the hype. Cyber criminals will trick their victims with Initial Coin Offering (ICO) fraud. ICO refers to when a company opens up a newly created cryptocurrency for investors to buy, trade, and sell.
One of the fraudulent schemes occurs when criminals spoof a legitimate cryptocurrency. Criminals will impersonate an already created currency, pass it off to investors, and steal any money that investors use to buy the counterfeit coin. They can easily accomplish this by creating phony websites or social media accounts, then sending out phishing emails to their bait – potential investors. These phishing scams have taken $225 million from their victims.
Another form of ICO fraud happens when criminals create a hoax cryptocurrency. The same outcome occurs, whatever amount you pay for the fake coin get stolen by the creator of the fake company. Take PlexCoin as an example. PlexCoin was an illegitimate cryptocurrency that stole up to $15 million from those who took the bait and invested.
So how can you tell a fake ICO from a real one?
Research, Research, RESEARCHDon’t believe everything you hear or read. With the aforementioned hype comes a lot of false information.You might have your money in your hand, ready to pounce, on the newest alternative coin that has the promise of a good investment, but how do you tell a legitimate ICO from a counterfeit one? Watch for these warnings when doing your research:
- An investment promise that seems too good to be true.
- The company’s information, like address or phone number, is unavailable.
- The company is not registered on any known stock exchange.
- Operations are located in a foreign country, or a country with lax regulations.
- The company asks you to invite, or recruit, more investors.
- There are vague or incorrect facts given about the mining process.
- You cannot convert investments into traditional currency because there is no open exchange.
With any investment, you would do extensive research on the stock. So treat cryptocurrency the same way and make all your decisions informed ones.