Before you buy crypto, you need to be sure that you’re going to be investing in a reputable exchange. You don’t want to buy into a scam, so you’ll want to make sure that your crypto exchange is licensed in your state. In addition, you should make sure that your cryptocurrency exchange will reimburse you in the event that you lose your crypto. It’s also important to practice good digital hygiene.
Scammers usually pose as legitimate government agencies, utility companies, or other reputable companies to steal your money. They might tell you that you have some sort of legal issue or that your benefits and accounts have been frozen. Then they will ask you to send them money in cryptocurrency to a “wallet address” they have provided you. Some scammers will even remain on the phone with you as they direct you to a cryptocurrency ATM.
Another risk with buy crypto is hacking. A hacker can access your private key and spend your crypto. This can cause a loss of your investment. This risk is even higher when you consider that it is harder to keep a large quantity of digital assets in an exchange than it is to keep stocks. Luckily, cryptocurrency exchanges are becoming more secure by adding third-party insurance to protect their customers against these risks.
While some exchanges have a zero-tolerance policy for security breaches, many are not. For example, Bitmart recently repaid its customers after a $196 million cyber-attack. Despite these precautions, there is no guarantee that a hacker won’t try to steal your crypto. Therefore, it’s best to check out the security features of the exchange.
Another big concern with cryptocurrency is that it’s volatile. The value can rise and fall rapidly, sometimes even by the hour. This means that a few hundred dollars invested today may be worth only a few dollars tomorrow. This makes it impossible to guarantee the value of your investment. There’s also no guarantee that the value will go up again.
Buying cryptocurrency is a great way to gain exposure to the demand for digital currency, but it’s not for the faint of heart. Unlike other types of investments, cryptocurrency has a high risk of losing money. But, if you’re ready to take the risks, investing in a cryptocurrency may be a good way to become rich. However, it’s still worth ensuring you have a well-diversified portfolio before you invest.