There’s a lot of hype about cryptocurrency, but is crypto safe? Find out everything
you need to know about crypto safety.
Is Crypto Safe?
Despite its decentralized nature, transactions on most cryptocurrency networks are very secure — as long as crypto users take precautions. The underlying blockchain technology is inherently secure. Crypto can be purchased, stored, and used safely — so long as the user follows best practices (see the section “How to Invest in Crypto Safely” below). And following those same precautions, crypto can be invested in safely. However, when it comes to investing, most experts recommend that crypto be kept at a relatively small percentage of your invested assets. In other words, it’s safe to invest in cryptocurrency — but you shouldn’t only invest in crypto.
Risks of cryptocurrency
Cryptocurrency also presents some unique risks that you should be aware of.
Volatility: Crypto markets can be volatile, meaning that prices can change rapidly. You can mitigate this risk by building a diversified portfolio and buying crypto for the long term (rather than attempting to profit from short-term cryptocurrency trading).
Lost keys: Cryptocurrency is secured by the use of public and private keys (passcodes, essentially). If you lose your private key, you lose access to your crypto. You can mitigate this risk by storing your crypto with a trusted custodian/exchange or by utilizing a Bitcoin wallet (more on this below).
Investment hype: Cryptocurrencies can be subject to intense hype and buzz, which can cause their prices to surge (and then crash). This is particularly true for lesser-known coins and “joke” coins like Dogecoin. If you lose your private key, you lose access to your crypto. You can mitigate this risk by storing your crypto with a trusted custodian/exchange or by utilizing a Bitcoin wallet (more on this below).
Investment hype: Cryptocurrencies can be subject to intense hype and buzz, which can cause their prices to surge (and then crash). This is particularly true for lesser-known coins and “joke” coins like Dogecoin. This risk can be mitigated by sticking to well-established coins, such as Ethereum and Bitcoin.
Limited history: Cryptocurrency is a relatively new concept, and many popular coins are less than a decade old. This presents a bit of a risk because we can’t look at historical data to see how crypto may behave in a major event, such as a war or a 2008-style market crash.
You can mitigate this risk by keeping your crypto investments