Diversifying Your Portfolio: Safe Cryptocurrency Investments With Our Tips

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Headlines of ordinary working people becoming millionaires overnight, riding high on the cryptocurrency boom, inspired a new generation of fortune hunters keen on making a killing in cryptos. What is ignored in the investment frenzy is the dark underbelly of the crypto revolution where hackers compromise the safety of crypto wallets and decamp with millions in cryptocurrencies.

If crypto investments are highly risk-prone, are we better off avoiding crypto investments altogether? Well, no. That would be like throwing the baby out with the bathwater. Should we rule out even the remotest opportunity of profitably growing our investments just for the sake of avoiding something terrible?

According to leading crypto investment strategists at crypto index fund by Cryptos Fund, the solution lies not in avoiding cryptos but in following best practices that safeguard each cryptocurrency investment in ways that protect investors and bottom-lines.

For Those Who Came in Late: What’s a Cryptocurrency?

A cryptocurrency is a highly encrypted and secure form of digital currency stored in a computer network as compared to fiat or regular money that you can physically handle. Cryptos are not legalized tender, but every unit carries intrinsic value and can be stored, exchanged, and traded just like real currencies.

The technology behind cryptos is called Blockchain, and Bitcoin was the world’s first cryptocurrency to become widely accepted. A decade down the road, we now have over 1500 cryptocurrencies and popular cryptocurrency exchanges where cryptos can be traded back and forth with other cryptos or for real currencies.

5 Vulnerabilities of Cryptocurrencies That You Need to Guard Against

According to Kaspersky’s Lab more than $9 million in ETH (Ethereum) cryptocurrency was stolen in 2017 using malicious social engineering methods that focused on hacking user information and unprotected cryptocurrency wallets. Businesses and cryptocurrency exchanges were targeted the most.

Brute Force Cracking: Automated software is used to rush user data through thousands of combinations till the original password is cracked. This is the most common strategy used to gain access to any domain that is password protected.

The Phone Porting Hack: The hacker steals your identity and gets your cellular service provider to port your number to the hacker’s mobile. Once the password to your crypto account is compromised, porting allows the hacker to divert OPT messages to a burner phone and reset your password to transact the account.

The Phishing Fraud: This involves posing as a trustworthy client or banker and aims to rip off sensitive customer information such as bank account details, passwords and pin codes. The more insidious form of phishing plants malware in your device to steal cryptocurrency wallet addresses and secret codes.

The Ponzi Scheme: A nonexistent scheme that lures people into believing that they stand to gain a steady income from investments plans that are scams in reality. The income people “earn” is actually the money that others ply into the fraudulent business.

Cryptojacking (Mining Malware): Unknown to the user, the computer is taken over by fraudsters to mine cryptocurrency surreptitiously.

This detailed listing of social engineering scams is not to panic you or discourage you from making crypto investments but is aimed at alerting you to potential threats that can be safely mitigated provided you know how to invest safely.

How to Transform Cryptocurrencies From a Minefield of Risks to a Goldmine of Opportunities – Safely

If you’re handling a cryptocurrency wallet, you need a three-pronged strategy for protection - encryption, backup, and anti-theft technology – without which your passionately traded money is as good as gone.

7 Pro Tips for Safeguarding Your Crypto Stash

  • If you’re in the habit of writing down passwords or secret codes, shed the practice quickly. Switch to mnemonic phrases that use songs, rhymes, and acronyms to remember codes.
  • You need to back up your wallet and record of crypto transactions using the 3-2-1 strategy. Basically, this means you preserve the same data in three separate ways. The primary storage is the crypto exchange or website. Secondary storage will be either your laptop or a handheld device. What happens if both primary and secondary data storage are compromised? Go for a third storage solution using a secure cloud-based software that syncs and stores your data on the cloud. Not satisfied? Add an extra layer of protection by backing up an external hard drive.
  • When you transact cryptos, you’ll be using sensitive public and private key codes. If these codes are hacked, it’s like giving away the keys to your home. You’re exposed. You need antivirus software that is technologically sophisticated enough to protect highly sensitive transaction like crypto investments – Spybot’s Anti-Beacon and Comodo Antivirus are top products that fit the bill.
  • A “hot wallet” is your crypto repository that is connected online. The recommended practice is to use a hot wallet only for trading small values in cryptos on a regular basis. Where the amounts transacted are larger, and investments are targeted for a longer duration, it’s better to switch those transactions to offline wallets.
  • Multi-Factor authentication or MFA is a technique that verifies your identity in multiple ways before giving you access to your computer system. Use MFA to protect cryptocurrency transactions and repositories through tokens, PINs, or apps that embed this technology.
  • Scrupulously avoid SMS/ OTP authentication protocols because of the risk of hackers stealing or porting your mobile.

3 Insider Tips on Minimizing Losses and Maximizing Crypto Gains

Probably, the biggest negative that stares a wannabe crypto investor in the face is cryptocurrency volatility. It’s like permanently being on a knife’s edge – you could win by a mile and also lose by the mile.

But if you’ve hit the ground running with the 7 online security tips we’ve discussed, you’ve done a fair bit of crypto research, and you’re prepared to weather the storms of skepticism and armies of doomsayers, here are insider tips that make your job easier, and crypto investments safer.

Don’t Place All Your Bets on a Single Cryptocurrency, Even if It’s the Market Leader

Just like you invest in shares or gold, and you spread the risks by diversifying your portfolio, follow the same instinct with cryptos. That way, even if your leading crypto bites the dust, others in the portfolio will rise to the occasion and cushion the loss. For a newbie, this is a huge ask because it can be dizzying just keeping track of currencies that fluctuate wildly.

The solution is the cryptocurrency index fund where you just track the performance of an index wedded to the best performing cryptos in the market. That way, you’re betting on the performance of the market as a whole without tying yourself to the apron strings of individual cryptos. The index buffers you and compensates for individual crypto volatility.

Don’t Fall for the ICO Trap, Your Fastest Way of Losing Money – Hook, Line, and Sinker

Where an IPO or Initial Public Offering is the means for an established company to offer shares and securities to the public to raise money, an ICO or Initial Coin Offering is a crowdfunding measure regularly used by startups and crypto companies to gather capital. The IPO is regulated by the SEC, but the ICO is more like the Wild West; you can shoot from the hip or get shot in the butt just as quickly, and there’s no big brother protecting investor interests.

The problem with an ICO is that very little money may go into promoting the digital currency and a lot more may be diverted to strengthen the company to pave the way for speculative trading, creating scams on the way.

Dive into an ICO only if you’ve thoroughly researched the underlying currency and you feel reasonably confident that the company has a proven performance track record.

Don’t Get Hustled Into Crypto Investments Because of the Fear of Missing Out

There’s no guarantee that you can replicate the headline-grabbing success of your neighbor who made his millions in crypto trading and settled lock, stock, and smoking barrel in sunny Florida. The anxiety that you’re somehow missing out on a great opportunity shouldn’t be the driving force behind crypto investments. Rigorous research, a sensible assessment of risks, and a deep understanding of what drives the crypto market should be your guiding philosophy.

If you’re dead serious about crypto investments, expand your knowledge base by enrolling in a top of the shelf online course like “Cryptocurrency Wealth: How to Trade & Invest Like the Pros.” Who can tell? Your journey to the six-figure income destination could start here.

Conclusion

The cryptocurrency market presents a mixed bag of potentially huge profits countered by crypto coin volatility, and there are scams galore and profiteers out to make a fast buck at the expense of gullible investors.

The adage "don't invest more than you can afford to lose" fits the crypto market to the tee. The safest bet is to be the conservative investor following the tips we’ve listed. Ground your decisions in extensive crypto coin research, basing assessments on the coin’s performance. Try to leverage spread betting to recover modest gains over crypto price movements covering a broad portfolio of performing coins in the short-term.

If you want to know what the future holds in store for cryptocurrency, mull over the fact that American students are twice as likely to own cryptocurrency as the national average. If the younger generation is so keyed up about cryptocurrency as an investment destination, should we lag behind?  

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