How to stay safe trading cryptocurrency
Cryptocurrency is often described as the wild west of the digital world. So, if you’re looking to invest but have some concerns about trading cryptocurrency safely, you’ve come to the right place.
While there are scams and security risks to keep an eye out for, the world of crypto is undoubtedly safer and easier-to-understand than ever before. Staying safe while trading crypto is pretty straightforward if you:
This article will tell you everything you NEED to know to stay safe while making the most of the crypto phenomenon.
What not to do
Let’s start with a plain and simple list of DON’Ts. Making sure you don’t commit these basic errors is your first priority.
Is Bitcoin safe?
Let’s get this out of the way first. Some newcomers believe that because Bitcoin is digital it can be easily hacked and manipulated. It is also fairly common for Bitcoin to be associated with scams and theft due to the horror stories we see in the media. However, as far as the security of Bitcoin and the Blockchain technology that powers it goes, this couldn’t be further from the truth.
A few things to know:
The truth is that the few who get scammed or have their money stolen in crypto usually aren’t very savvy about technology and common online scams. Don’t want to be one of these unlucky people? Keep reading.
Choose a trusted & secure exchange
Signing up to a trusted cryptocurrency exchange is often the first step. And many get it wrong.
Exchanges differ greatly in terms of fees, number of coins offered, security measures, customer support and user-experience. Depending on what kind of trading you will be doing, it is always worth looking at a few different options before deciding.
For advice on how to choose the right crypto exchange, click here. No-one likes having their money stolen, so make sure the exchange you choose has:
Note: Most exchanges also provide you with an online wallet where you can store your cryptocurrency. However, if you are dealing with large sums of money, we recommend moving at least a portion of your assets off the exchange and into a cold, offline storage (hardware or paper wallet). To learn more about wallets, check out our article here.
How to stay safe trading crypto
Become immune to FOMO
Now this isn’t exactly a security threat, but it may as well be. FOMO, or fear of missing out, is rampant in the world of crypto. It’s what’s driven much of the hype around crypto, and it’s the reason many new investors end up investing in something they do not understand.
What you need to know is this:
Do your own research
DYOR. Always. There’s a lot of noise in the crypto world, and if you’re serious about trading there really isn’t any other way to know what you’re getting into apart from putting in some time to do the research.
While it can be hard to know what to look for at the start, stick to reputable websites and social media accounts (YouTube is a great resource for beginners), and you will gradually get better at assessing information and promising projects to invest in. For more information check out this super-handy guide on how to do your own research in crypto.
When in doubt, reach out
If something seems a little suspicious, whether it’s a strange email or an early investment opportunity that seems too good to be true. Don’t be afraid to reach out to the company or platform’s customer support, or get a second opinion.
At Digital Surge, we deliver personal customer support to all our traders, so if you ever need something cleared up, don’t hesitate to contact us.
Double check the wallet address before sending
When sending crypto from one wallet to another, make sure you DOUBLE CHECK the wallet address that you are sending to is the correct one. Once a transaction is made with crypto it is irreversible.
Bitcoins can only be received by Bitcoin wallets and Ether can only be received by Ethereum wallets. Never type the address in manually (use copy + paste) and make doubly sure you are sending your coins to the right address or you may never see them again.
If you have a large amount of crypto to send, consider doing a small transfer first to make sure it arrives, then you can send the rest.
Don’t put all your eggs in one basket (for large amounts)
If you’re dealing with a serious amount of crypto, it is not advisable to keep it all in one place. Trusted exchanges are secure enough for most users, but ideally you would move a portion of your funds onto a hardware wallet, with your private keys/seed phrase (which gives you access to your funds) safely stored and backed up somewhere. Never share them with anyone.
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Common scams to look out for
Scams, hacks and fraud are common stories in the world of cryptocurrency. Luckily, these can be easily avoided by knowing what to look out for.
Here’s a summary of the scams you are most likely to run into and how to avoid them:
There are lots of ‘investment firms’ who claim that they will ‘do the crypto investment for you’. While this can be appealing for newcomers who don’t know much about crypto, this is a text-book scam.
They will often contact you directly via phone call or email asking you to create an account on an exchange and then to send them crypto to invest on your behalf. This is an immediate red flag. Always stick with a trusted exchange, and do not use external third parties to do the investment for you. If it seems too good to be true, then it probably is.
Pump & Dump schemes
The pump & dump – a classic trading scam which many stock traders are familiar with. This is basically when an asset is artificially hyped and coordinated bulk buying sends the price skyrocketing up, only for those with inside knowledge to sell their holdings and take profits, sending the price crashing back down and taking all other investor’s money with it.
Most pump and dump schemes convince people into thinking that getting in early to a great project (often during the ICO (initial coin offering) phase) will bring them huge returns. While this might actually be the case, keep in mind that these early ICO opportunities are very rare and that many crypto projects fail before ever getting off the ground.
If getting in early to a great project was easy, everyone would be doing it. If it seems too easy, then you should probably be wary of a pump & dump or a fraudulent ICO.
Free giveaways and social media impostors
There are countless ‘free giveaways’ of Bitcoin online, but it’s incredibly unlikely that a legitimate giveaway will never require you to send your own money or crypto first. Keep in mind that legitimate giveaways do exist on reputable exchanges – you’ll get some free BTC when you sign up with Digital Surge!
Be wary of these kinds of messages that come up on social media and keep in mind that they might be coming from accounts which look identical to the celebrities and crypto gurus you follow and love. It’s far too easy to impersonate someone famous online and the use of bots allows these scams to seem legitimate by having dozens of ‘thank you’ replies on the post.
Phishing & Email scams
Phishing most commonly refers to receiving an unsolicited email that looks as if it’s from a trusted source like a bank or a crypto exchange or wallet provider. These emails usually look fairly genuine and contain a link which will take you to a site that looks almost identical to the exchange or wallet you usually use. But it’s a fake.
After putting in your account details on this unofficial page, it isn’t hard for them to log in to your real account and steal your funds. Here’s how to avoid phishing scams:
Other common scams to look out for
Fake mobile apps, fake exchanges, threats from unsecure public WIFI, unsolicited phone calls and messages from people claiming to be from an exchange or the ATO or a Nigerian prince.
These are pretty self-explanatory, so we won’t dive into them. If something seems fishy, take a moment to verify that you are dealing with a genuine person or organisation and not a scammer.
To get savvy on the most common crypto terms & slang, click here.
Basic online safety precautions
Some other basic security measures that will keep you safe online:
Like any new industry moving at breakneck pace, there are scams and hacks to be aware of. Luckily, with a bit of common sense and knowledge about the crypto landscape, investing in this exciting new resource has never been safer.
Looking for the easiest way to trade over 250+ cryptocurrencies in Australia? With extremely low fees, unbeatable customer support and a trading experience that makes crypto simple & easy-to-understand, Digital Surge is changing the game.
For more practical crypto education, check out Crypto Simple – a crypto education hub that aims to get you crypto-savvy in as little time as possible. We hope to see you around.
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