Investing in blockchain Fintech companies can be both exhilarating and profitable. But with reward comes inherent risks. Risks that if not managed appropriately can lead to loss of capital and growth of investment. Read this blog post to discover the most common risks and my top tips for cryptocurrency investing risk management to make sure that your gains from crypto are realized.
Spoofing Payment Information and Phishing
One way scammers can get a hold of your crypto is by spoofing payment addresses. Let’s say you want to transfer coins from yourself to another person, and you copy the receiving address and paste this into the transfer box – who really checks the long string of letters and numbers that are generated on the copy to clipboard. If a hacker makes sure you’re copying their address, then wham your transaction goes to them.
With phishing, you get directed to a scammers website rather than the actual website of the blockchain company. Here passwords and login information can be stolen. Once your crypto has been hacked and then that’s it – game over. There’s no comeback and no one to complain to.
Loss of a Wallet File
We have all heard of the stories where millions of pounds of Bitcoin has ended up on a rubbish tip. These cryptocurrency risks are real. If malware affects your .dat file or your hard-drive crashes then you can lose your crypto. All users should have recovery phases and backups of their private keys, but still, the number of people falling foul of simple preventive steps is high.
Insecure of Fraudulent ICOs
ICOs can have massive upsides for investors however the flip side of the coin is that ICO tokens can launch and trade well below their issue price. This can continue for months after the ICO, or indefinitely if the platform is poorly received which can be for several reasons.
Additionally, the space is unregulated so you have to extra vigilant in how you participate. If you send your funds to the wrong receiving address, then you have no recourse. If you’re hacked, then bad luck. If the ICO is vapourware, then your investment can evaporate. I’ve blogged about the risks and rewards of ICOs previous which you can check out here.
Top Tips for Cryptocurrency Investing Risk Management
1. Always verify a web wallet’s address and never follow links to get to the web wallet platform.
2. I always, when sending and receiving crypto, do a quick visual check of the first few numbers/letters of the address and the last few in the string. This is a quick check to build in a little security that the address is what you believe it to be.
3. Write down a mnemonic phrase that allows you to recover a crypto wallet. With this, you can open your wallet on any computer in the world. Hide the phrase somewhere safe in your home.
4. Get yourself a cold storage device like a Ledger Nano.
5. Always research ICOs thoroughly and invest in the best.
6. Only invest what you can afford to lose.
7. And finally, keep your computer clean. Visit only reputable sites and have a good antivirus. Be smart!
Thanks for reading my latest post. And stay safe dude’s: scammers don’t deserve your coins.
This guest post has been written by Crypto Coin Dude who can be found most days hanging out on his crypto blog.