Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.
Every time we hear or read about buying crypto, we usually also find a few warnings that tag along with it. Being a relatively new investment class, Crypto obviously carries its own set of risks. However, rather than being discouraged, one can exercise the necessary precautions to be a diligent and well-informed investor. This article will give you some general guidelines on buying crypto.
1) Invest what you are capable of losing
This does not mean that you have to treat crypto like charity but rather ensure that you are not breaking the bank or sacrificing essential living expenses like food, rent, etc., to buy crypto. Hope for the best but prepare for the worst.
2) Keep it to yourself
In the age of social media, there is a tendency to post more details about our life than necessary. It is advisable not to tell anybody about the amount of investment, the website used, usernames, etc., so as to not attract the wrong type of attention. Posting about such details online leaves you more vulnerable to hackers and other undesirable parties.
3) Use secure websites
Websites that begin with ‘HTTPS’ are more secure than those that begin with ‘HTTP’. They will also have a padlock icon next to the website address. Only such websites should be trusted to enter personal details like your password. Protect yourself from phishing attacks by double-checking the website that you have visited. Once verified, it is better to bookmark the same, so you do not visit the wrong website in the future by mistake.
4) Strong passwords
It is a human tendency to keep passwords that are easy to remember and that are personal in nature. However, doing so just makes the job easy for an attacker to guess the same. Instead, a unique password generator tool should be used. Further, it is recommended not to store this password anywhere on a computer device but instead write it down on a piece of paper. Crypto logins, passwords, passphrases, etc., can be written down in physical form to avoid any chance of leakage of information.
5) Double-check transaction details
Before transferring any amount, ensure that you check the transaction details for any errors. Unlike the banking system, a crypto transaction cannot be reversed in any way.
6) Do your own research
There are so many various cryptos trading these days that it might get confusing to decide where to invest. Make sure to do your own research and use trustworthy news sources. At the time of deciding which crypto to invest in, instead of comparing which one is more expensive, a better factor to consider would be the market capitalization of the crypto under consideration.
7) Store crypto securely
There are basically three ways to store your crypto:
- Maintain an account with a crypto exchange
- Hot Wallets – they maintain your crypto wallet online
- Cold Wallets – your crypto wallet will take the form of an external device like a USB drive
Depending on your level of technical proficiency, you can go for one of the options above, but the safest would be to use a Cold Wallet. If you have to use the services of a crypto exchange, make sure that two-factor authentication is enabled for your account to prevent unauthorized access.
8) Secure your identity online
There are various tools available to maintain anonymity and security online. Also, make sure that your antivirus remains up-to-date.
9) Use the stop loss function
Since crypto is a relatively volatile investment class, it would be prudent to set up a stop loss just like in the case of share trading so that your exposure is limited.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.