Following a new jump in the prices of major cryptocurrencies by the end of 2020, crypto enthusiasts have begun to break, sell and buy currencies with renewed vigor, which means that the subject of cryptocurrency ownership is more important than ever. But unlike previous bulls, this time many users are also interested in how they protect their belongings.
The blockchain industry is evolving and sellers are noticeably smarter, but scammers and thieves are also becoming more resilient. This is also evident from the emergence of news about exploits and seizures, not only in relation to ordinary users, but also in relation to large stock exchanges, decentralized financing projects and even non-perishable tokens.
Scammers use a variety of tools, from hacking accounts to creating malicious software. Even well-known projects can not avoid this fate. For example, Trezor recently discovered fake apps on Google Play that affect some users. And at the end of December 2020, more than 270,000 customers of the popular Ledger wallet faced threats after a hacker revealed his identity.
All of this indicates that cryptocurrency enthusiasts should be extremely careful when choosing how to store their assets.
Buying cryptocurrency has become commonplace
Bitcoin (BTC) has established itself as an accepted investment and value store in 2021, and is now being compared to gold. This became particularly noticeable when institutional investors began researching and investing hundreds of millions of dollars, and sometimes billions, in BTC.
From Jack Dorsey Square, which recently spent another $ 170 million on BTC, to M31 Capital filing with the US Securities and Exchange Commission to launch a new bitcoin hedge fund, cryptocurrency has become mainstream. In addition, the bitcoin fund Grayscale Investment now manages over $ 37 billion in BTC, suggesting that institutional investors have confidence in the tool. All of these examples make cryptocurrency a viable investment option and for retail investors.
In addition to just buying cryptocurrencies, there are new ways to make money in the market, such as decentralized financial protocols that provide various blockchain-based financial services. This is actually a very good way to generate stable income from cryptocurrencies with fairly high annual interest rates.
The emergence of decentralized exchanges has made it easier to own and exchange cryptocurrencies. This method of trading cryptocurrency has gained a lot of popularity in recent times.
These exchanges, such as Uniswap, allow users to make transactions directly between wallets. This method indicates that users need to know how to store encryption properly and handle a third party.
Alternatively, users also have central exchanges available; However, there are some risks associated with holding funds. For centralized exchanges, this means that the cryptocurrency on the platform accounts is automatically taken over by the exchange, which means that users do not have full control over their assets. Therefore, most commentators recommend keeping cryptocurrencies in external wallets.
Examples of cryptocurrency wallets in 2021
Every user should remember some basic security rules that are not related to the cryptocurrency itself or the equipment used. The most important thing is that users remember their password. It may seem obvious, but users regularly lose large amounts of money just because they forget their passwords.
There is no password reset function for blockchains and no support service to contact. It is also a mistake to forget the starting word phrase of 12 words for a portfolio, or to write it down on a medium that is easily lost. The most effective recipe for securing cryptoassets is to be responsible for storing passwords and generating a password phrase for the key.
When it comes to online wallets, this is a little easier and the consequences of losing your password can be avoided because the keys belong to a trusted third party. The wallet owner has no control over the keys, he just logs in with the username and password. If they lose the password, they can contact support, verify the identity and reset the password. From a decentralization perspective, however, this is not the best option, since the user delegates the administration of the keys to a third party.
The user must decide what is most important to him and whether he really trusts the company that hosts their cryptocurrency portal. Furthermore, every user should be responsible for their capital, because no encryption wallet or blockchain is responsible for forgetfulness or inattention.