After the whirlwind rise of cryptocurrencies in the past several years, mostly Bitcoin, more people are investing in Blockchain-operated technologies than ever before. Becoming involved and investing your time and money in a risky business like cryptocurrency, it has advantages as well as its disadvantages. Yes, you might double your profits by 1,245% but unfortunately that is not always the case. One of the fundamental things people fear in the cryptocurrency sphere is deception because nobody wants to be on the losing end of a Ponzi scheme, or any other scheme for that matter. Losing your hard-earned money because of a hacker, a virus, or lack of research will make you regret even hearing about Bitcoin and its successors. However, if you are willing to take the risk and jump into this crypted universe, we are here for you with some advice to help you avoid schemes.
First and foremost, if you are not educated enough in the matters of cryptocurrency, do not get involved. Blockchain is a highly complicated technology and it is not user friendly. It needs skills, responsibility and commitment to always secure your money. Never get involved in things you do not understand.
The Bitconnect incident is a prime example to that, when “developers” promised investors that they will earn 1% per day and were then left penniless when it crashed. Cryptocurrency schemes are on the rise, with startups or developers guaranteeing high profits with low risk. High risk is expected when you are investing big portions of money, so anyone promising you otherwise is probably planning a Ponzi.
Vitalik Buterin, the founder of the Blockchain network Ethereum, reminded people via Twitter not to “[… ]put in more money than [they] can afford to lose” because “cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time”. If you are starting to invest, follow his advice and start investing slowly and gradually.
The key to keeping your money safe in the cryptocurrency world is proper research. Start by researching the team of developers, their advisors and their credibility. Check the source of their fundings as well as their timelines and goals. Listen to warnings from people in the Blockchain community because they probably know better. The Blockchain technology is built on transparency, so always expect it and demand it. Therefore, all transaction records should be available to the public. Furthermore, when researching, stay aware of red flags, like sudden overhyped articles or videos encouraging you to invest, vague information or anonymous developers.
In the digital world, no means are too extreme when it comes to protecting your money. Do everything you can to secure your investments properly. To start, invest in a hardware cryptocurrency core wallet, then make a backup, 2 or 17. Make as many backups as possible. Store them onsite, offsite and somewhere in between. Data, unlike hardware and software, cannot be replaced once it is gone. Additionally, to stay on the safer side, do not store all of your cryptocurrency in one wallet, spread it wisely. Also, encrypt everything: your codes, your passwords, your wallet. After that make sure to use two-factor-authentication for all of your accounts. Also, be aware of phishing and make sure to always avoid it.
After investing in cryptocurrency, you need to stay up to date with any cryptocurrency related developments. Do not undermine the importance of blockchain accounting when it comes to paying your taxes because cryptocurrency rules and regulations are always changing.