Within the first five years when crypto coins started gaining popularity, there has been a relatively high incidence of hacks and loss of coins. This has been the result of common mistakes made by traders. Due to the widespread enlightenment campaigns run by different crypto coin communities, the incidence of lost accounts and hacked accounts has greatly reduced. Yet the fact still remains that we cannot overemphasize the importance of talking about such mistakes and how to avoid them going forward. That being said we are going to look at 8 common mistakes made by crypto traders.
1. Using a hot wallet storage system for holding coins
There are two types of wallet systems – a hot wallet and a cold wallet. Both wallet systems have their unique features. Most crypto communities have shared different benefits and features of their wallet system and declared how secured they may be. But truth be told – saving your coins for an extended length of time is not entirely safe for hot wallet storage. Hot wallet storage requires the holding of coins to be internet-based only – thereby making it vulnerable for hackers to have access to it even from another server. Therefore it is advisable that after performing your trade in hot wallet, you should transfer your earnings to the cold wallet in order to reduce the risk of being accessed by hackers.
2. Creating a secure password
In December 3rd 2018, the password management and crypto custody company Dashlane announced its annual ‘worst password offenders’ list, with cryptocurrency users sitting at the third spot. The statistics showed that there is still a lot of sensitisation work to be done in the use of passwords in the cryptocurrency community. Securing of coins is not only the responsibility of the network but also a shared responsibility with the users. Users play a pivotal role in coin security in its initial stage when securing their wallet. Every wallet system requires a password system to access its token. But the requirements of any wallet demands a long, strong password combining unique characters, letters and numbers for the high fortification of the wallet. While people might seek the use of a password generator, a fundamental disadvantage is its inability to recur it. When creating a password phrase for your coin, use a phrase that is difficult to crack but easy to remember.
3. Ignoring the use of 2FA
Aside from cryptocurrency, many platforms like social media and financial industry has seen the necessity to curb cybercrime by using two-factor authentication tools. This extra layer of security feature, whenever there is any strange trespass on account increases the level of security by demanding for more actions or details aside your username or password. When using a two-step authentication tool, codes are usually generated as a means of getting across to your account whenever a strange device is being used to access your account. These codes which are usually difficult for hackers to intercept, act as a gateway to protect your crypto coin from hacks.
4. Not verifying strange cryptocurrency opportunities online
Any platform where there is a significant exchange of assets and cash is more prone to hacks. Just as the cryptocurrency network keeps fortifying its security system, hackers likewise are devising more hacking strategies. People have easily fallen for strange opportunities because of greed or the inability to investigate such opportunities. Some of such strategies include fake mining pools, fake wallet systems, fake ICO, phone-porting and the use of fake malware. The growth of the blockchain industry is not a good enough reason as to why users should become victims of such traps and scams online. Different online blockchain communities coin news updates and professional blogs have been able to educate users on the latest coin to buy and genuine ICO to contribute in other avoid cyber attacks.
5. Losing your private keys
The worst that could ever happen to any cryptocurrency trader is to lose their private key. It is one thing to forget your private key but an entirely different thing lose it to hackers. Whichever the case may be we don’t want to fall victim to any of them. The use of modern technology has made it entirely possible to secure keys from hackers and avoid forgetting them permanently. Technological hardware like hardware wallet – that is designed like a USB drive, helps to secure private keys in offline storage making it difficult to hack and allowing it to be within reach anytime you need it. For individuals who find it expensive to buy, you can print out your private key in a paper form called a paper wallet. But when paper wallets are printed out make sure it is kept in a place entirely away from strangers in other to provide security for your coins.
6. Disregarding the joining into crypto communities online
Truth be told, there is always a pledge of responsibility to asset – no matter how small it may be. The very first day you start investing in any form of cryptocurrency, your race to securing it and staying up-to-date begins. Most individuals who have one way or another lost track of their coins have done so largely due to ignorance and lack of receiving regular updates from the coin community. Today, all coins have a community such as on blogs and Facebook groups for investors to keep updated about the latest news in the cryptocurrency world. Online communities and crypto experts provide relevant information with regards to all the problems faced by investors.
7. Not trying newer opportunities
Blockchain opportunities are everywhere. Every day new coins and offers are birthed into the system. This creates more gateways to invest in newer opportunities. As a coin becomes overpopulated by investors and miners, its features and rewards become reduced. This is done in order to sustain its longevity and keep the coin in circulation to avoid over-mining. On the other hand with newer coins, opportunities generated from their creation becomes numerous and juicy, enabling early investors to reap the majority of its benefits.
8. Using the wrong strategy for investment
Different schools of thought have paraded the internet regarding the best strategies to use to invest in cryptocurrency. But the truth is that each coin has its own unique investment strategy. One mistake made by different investors is using the wrong strategy for the wrong coin. While some require selling at a high price, others require holding them for long periods in other to usher in new opportunities.
