Cryptocurrency investing has exploded in popularity in recent years. However, it also comes with risks like hacking, scams and extreme volatility. Verifying your crypto investment sources is crucial to avoid these pitfalls. This article will explore best practices for safely investing in cryptocurrencies, including using regulated exchanges, enabling two-factor authentication, using cold storage wallets and diversifying your crypto portfolio. Proper verification allows crypto investors to harness the potential upsides of blockchain assets while minimizing downside risks.
Choose regulated crypto exchanges like Coinbase and Kraken
Regulated exchanges like Coinbase and Kraken have strict security and identity verification standards. This protects you from potential hacking risks that exist on unregulated platforms. These exchanges also insure user funds in case of breach. However, regulated platforms typically have higher fees. But for most investors, the extra security and peace of mind is worth the cost.
Enable two-factor authentication on accounts
Two-factor authentication adds an extra layer of account security beyond just a password. This requires users to verify their identity through multiple methods like email, phone or authentication apps. While inconvenient, 2FA prevents hackers from accessing your accounts even if they steal your password. All major crypto exchanges support 2FA.
Use cold storage hardware wallets for larger holdings
For significant crypto holdings, using a cold storage hardware wallet like Trezor or Ledger provides optimal security. These wallets keep your private keys offline so they can’t be remotely hacked. Manually approving transactions on the device also prevents theft. The only risk is losing the physical device. For maximum amounts, use a multi-signature wallet.
Diversify across asset classes beyond just crypto
While crypto offers exciting growth potential, it is still a highly speculative and volatile asset class. Maintaining a well-diversified portfolio across stocks, bonds, real estate protects you from the downside risks of overexposure to crypto. Rebalance periodically to keep your desired allocation.
Verified crypto investing requires using regulated exchanges, enabling 2FA, utilizing cold storage and diversifying your portfolio. This provides exposure to crypto’s upside while limiting the substantial risks. Savvy investors should verify their sources to invest in blockchain assets safely.