How Safe is Cryptocurrency Trading?
If it is your first time to hear about cryptocurrency trading, it is understandable why you have doubts regarding the legitimacy of such an activity. If the concept of buying cryptocurrency or selling altcoins isn’t new to you, you could still be asking yourself why is bitcoin safe or how safe it is crypto trading.
Every day we hear news concerning bitcoin investments scammed, altcoins abruptly dropping much of their value at an instant, and even about the best cryptocurrency exchanges being hacked.
When people ask, “Is crypto trading legit?” they may mean two things: “Is crypto trading legal?” or “Is crypto trading safe?”
Merriam-Webster defines legit or legitimacy as something that is (1) accordant with law, (2) being as intended and not false, and (3) genuinely excellent or capable of success. A legit activity is characterized by legality, authenticity, and safety. With all the issues surrounding cryptocurrencies, can we still assert that cryptocurrency trading is legal or safe?
If we use the first definition of legitimacy as being accordant with law or being legal, then it could be difficult to give a categorical response because the legality of bitcoin or cryptocurrency trading is dependent upon the jurisdiction of a certain state. Different countries have different laws covering financial transactions, technological developments, and trading activities.
So if you ask, “Is cryptocurrency trading legal in US?” then we can look into the current regulations set by the federal and state authorities. As of February 2020, we can say that Bitcoin is legal in the United States, and crypto trading is regulated with varying degrees in different states. This year, the IRS has created a new tax form that will be used by US taxpayers in the declaration of their altcoin and bitcoin transactions in 2019.
If you are residing in the USA and are interested in looking for the best cryptocurrency trading platform, you may consider StockBrokers’ list which includes Coinbase, Kraken, Bittrex, Gemini, and Robinhood. According to them, the best crypto exchanges in the USA offer robust security, a user-friendly website, and access to trading a variety of digital currencies. (Kraken, Coinbase Pro, and Bittrex easily can be integrated into the altrady crypto trading platform. Binance US is also available at the altrady app.)
Now, let us delve deeper into the other aspects of crypto trading’s legitimacy. Is it authentic? Is cryptocurrency trading safe?
Again, there is no categorical answer to these questions because the safety of being involved in a crypto trading activity depends greatly on your own decision-making and the authenticity of a crypto trading platform depends on many elements. In its core, virtual currency trading is indeed a real activity. In essence, bitcoin and altcoins can be traded in various ways using different platforms. According to Investopedia, there are more or less 200 cryptocurrency exchanges as of 2019, and more platforms appear every month. CoinMarketCap lists a total of 315 cryptocurrency exchanges as of press time.
Once you have decided to engage in trading crypto, you have to exercise extreme caution and proceed with wise decision-making in order to prevent being scammed and to effectively protect your digital assets.
Here are some tips on how to safely trade cryptocurrencies:
Research and Explore the Cryptocurrency Trading World
Since it is your first time, do all your best to learn crypto trading. Don’t be afraid to ask even the smallest questions such as “how crypto trading works,” “what crypto trading tools you can use,” “where to buy bitcoin,” “how does a crypto trading bot work,” and anything that comes up in your mind. Just like in any business venture or financial transaction, you need to have a total understanding of what you are getting into before making any investment or payment.
Digital currency investors who buy and sell Bitcoin and other altcoins are advised to do the necessary research before proceeding with their actions. Stay informed regarding cryptocurrency exchange reviews, check cryptocurrency news, examine crypto whitepapers, and visit forums to gain more knowledge about the crypto trading industry.
Invest the Amount that You are Willing to Lose and Spread Your Assets
Investing the amount that you are willing to is among the constant crypto trading tips that you will see anywhere. Never enter a trade with everything that you have. You need to make a careful evaluation of your assets in order to know how much you can risk so that you can still go about your normal activities even in the face of the worst scenario.
Cryptocurrency trading can be extremely volatile. Crypto markets experience more fluctuations than stock markets. An altcoin that went on a bullish trend for months can suddenly drop and surprise you. Apart from investing only the amount that you can afford to lose, it is also wise to spread your assets into different good-performing digital currencies.
Beware of Phishing Scams and Fake Versions Exchange Websites
Some of the cryptocurrency scams that happened are because of carelessness in validating the authenticity of the website people are visiting. Phishing scams are widely used by hackers to gain information that is useful for accessing the users’ crypto exchange wallets. This scam is done by creating a fake and identical version of the cryptocurrency exchange then emailing the link of this site to the target. The mail usually includes a convincing message that lets people immediately click on the link that directs them to the fake login page. It is, therefore, essential that you are aware of the official URL of your crypto exchange platform. Never click on dubious links.
Keep Your Devices Safe
Among the cryptocurrency security tips offered by coindiligent is to make sure that your devices such as desktops, laptops, and smartphones used for cryptocurrency trading activities are safe. Be always careful when installing software, downloading attachments, or clicking on random links on the websites you visit. Make sure to have updated antivirus and enable your computer’s firewall.
Intensify Your Login Information and Your Wallet Security
It should be common knowledge to keep your login information, especially your passwords, as intense as possible. Use difficult passwords on your exchange accounts with a combination of lowercase and uppercase letters, symbols, and numbers. If thinking of a new complicated password seems to be a difficult job for you, then using a password generator may be of help. Store your passwords offline by writing them on a piece of paper and storing them properly.
It is also advisable to enable two-factor authentication (2FA) to add another layer of security to your cryptocurrency exchange accounts and even your email accounts that are connected to your exchange. The most common methods for 2FA are passcodes sent to your email or by SMS.
Have a Crypto Trading Strategy
As CoinRedact asserts, “Without the right strategy, you can easily lose in this game.” Pursuing this venture without a crypto trading strategy is like going on a battle empty-handed. You are not only prone to making wrong trading decisions, but it can also lure you to performing unsafe crypto trading practices such as joining pump and dump activities. These pump and dump practices are characterized by a group of influencers who are trying to generate a hype in order to encourage traders to buy a certain coin at the same time. At first glance, joining may seem tempting because of the high returns foreseen. Still, in reality, this illegal activity usually benefits only a small group of traders.
It is essential to familiarize yourself with the crypto trading strategies used by some of the most successful crypto traders. One of the proven strategies is the QFL method or the Base Strategy, which works by identifying bases to determine the right time for buying and selling coins.
Once you have set your strategy, then look for the most helpful crypto trading tools that could ease the usually stressful and time-consuming activity. The altrady software, an all-in-one cryptocurrency trading platform, features a base scanning application through the Crypto Base Scanner. This tool is founded on the QFL strategy and works by automating the crypto market analysis. It uses unique algorithms to identify trading bases and to help users determine their buying and selling actions depending on the support levels for each crypto market.
Cryptocurrency trading can be a lucrative venture that can potentially give you profits when done with the right strategy and careful decision-making. Follow the safe crypto trading tips to protect yourself from the volatile market and other external factors.