How to prevent crypto investment loss
April 3, 2019, | AtoZ Markets –Over the last few years, the number of crypto holders that had lost their funds due to the hackers. And the crypto exchanges security vulnerabilities has grown. The crypto enthusiasts continue exploring the new ways on how to prevent crypto investment loss.
Proper security measures help to prevent loss of digital funds
Cryptocurrency users can store an unlimited amount of digital assets inside a free crypto wallet. Adequate care of the digital storage and precautionary measures, help to prevent crypto investment loss. As the wallet can be accessed only by its owner.
Krypto enthusiasts emphasize that possession of a cryptocurrency has a large number of positive aspects. Also, the cryptocurrency and technology provide financial services to people who have never had access to them. You can easily and quickly invest money, make free money transfers, and promptly and safely carry out transactions in financial institutions.
Crypto investment loss happens due to crypto jackers
The excitement around the cryptocurrency, which started in 2017, encouraged crypto enthusiasts to promote the benefits of the digital assets in every media channel. The compliments addressed to cryptocurrencies were often accompanied by a warning about risks- cases of hacking, fraud, and money laundering. Nevertheless, many cryptocurrency industry insiders did not pay this warning proper attention. Not much attention was paid on how to prevent crypto investment loss. As a result, more and more cases of loss of funds and devastated users and exchanges continue to appear.
QuadrigaCX clients’ fate stays unknown
The most recent vivid example of the loss of a large number of digital funds occurred on the Canadian cryptocurrency exchange QuadrigaCX. One hundred fifteen thousand users of the exchange left without access to their funds. It happened after the CEO of the exchange, Gerald Cotten, died in December. Cotten supposedly was the only person who knew where the private keys of the exchange are stored.
When QuadrigaCX CEO died, the private keys of the cryptocurrency purses of the exchange were lost, perhaps forever. This outcome was due to the apparent lack of foresight on the part of the exchange. And it was also the lack of oversight by the Canadian regulatory authorities. As a result, QuadrigaCX was left without access to most of its assets when Cotten passed away. Earlier this year, Atoz Markets covered an article detailing the QuadrigaCX case.
Lost funds might never be compensated
Nevertheless, everyone should view the QuadrigaCX incident as an example of unsuccessful management and a useful lesson for holders of crypto.
Affected users could avoid losing their savings by taking a simple step, first of all, not to keep their cryptocurrency on the exchange.
If crypto investments are stolen or lost, a government or any users’ protection agency won’t compensate these loses. To avoid this, here are some methods of how to prevent crypto investment loss.
Ensuring private keys will help to prevent crypto investment loss
The most crucial factor in ensuring the security of digital funds is the method of storing private keys. That gives access to the crypto exchange. The safest way is to store private keys in “cold storage,” so they cannot be accessible via the Internet. In the case of “hot storage,” you can access private keys online.
There are several ways to store coins in cold storage. The easiest and cheapest way is to make a paper wallet. You can use several websites to safely generate random strings of characters. you can use it to store cryptocurrencies. After making a paper wallet, you should keep several copies of it in safe places. That way, if one copy is lost or otherwise destroyed, the coins will still be available.
Using paper or hardware wallet helps to prevent crypto investment loss
Although some experts do not recommend creating paper wallets, as they are challenging to create without the risk of phishing or other theft. It is essential to follow some precautions to avoid that.
- The paper wallets generator used is not a phishing site that might steal private keys.
- Always use antivirus software.
- If possible, print your paper wallets on an unconnected printer to the Internet. To make sure that any viruses that may be in your printer will not be able to steal your keys.
The second and more expensive option is to store private keys on the hardware. You can purchase an encrypted hard drive or a hardware wallet manufactured specifically for storing cryptocurrency keys. Some of these hardware wallets have the added advantage of regeneration keys. You can use sets of words or phrases to restore your wallet if you lose access to it.
Cryptocurrency deposits are for large amounts of cryptos
The digital assets holders are using a cryptocurrency deposit service. It stores a large amount of cryptocurrency. These services use advanced encryption, physical storage, and distributed storage to secure accumulated cryptos. Some of them also offer insurance in case anything happens to your cryptocurrency. However, as for the paper wallet, it is crucial to be sure about the legitimacy of the cryptocurrency storage service and the protection measures.
Careful examination of the crypto exchanges another measure to protect personal funds
Another essential security measure to take is to examine the exchanges and other cryptocurrency platforms carefully. That you use before sending your coins into them. One way to make sure that the service you use is legitimate is to find out what the cryptocurrency community says about it. A simple Google search will give you access to the best and worst experiences that people had in a particular cryptocurrency company. Some important things to consider when researching an exchange include:
- Anyone hacked this platform before? Also what steps has the platform taken to prevent similar incidents in the future?
- This service is secure? Also does a government agency or private company protect it?
- What customer-service is available?
- Location of the platform? Also what government regulations protect a user in the event of a hack or other emergency?
- What is the reputation of this platform in the cryptocurrency community?
- How does this platform store its cryptocurrency? Is cold storage available?
- What types of protection are available for the users? Does the platform use two-factor authentication?
- Have there ever been phishing sites of an “imitator” on this platform? What were the addresses of these sites?
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