What You Need to Know About Cryptocurrency Before Buying
Cryptocurrency is one of the most profitable assets. During the coronavirus crisis, investors have a unique opportunity to earn even more on cryptocurrency.
To work with crypto assets, you need wallets to store them. Those, in turn, work with two types of keys:
- public, which cannot be disclosed to anyone
- and private, which, as the name suggests, is visible to all blockchain users.
The public key will be like an email; with the address, you can get the money, while the private key will be the password to access that email account and verify the message (in our case, the money).
Before choosing a crypto wallet, it is recommended to study another important nuance – the system for storing private keys. Some wallets, such as Metamask, save private keys only on the user’s device.
In turn, the lion’s share of online wallets prefers to store private keys on their own servers. This creates unnecessary risks because scammers often aim to hack cryptocurrency online wallets in order to take possession of user funds.
Working with exchanges
In addition to the traditional centralized trading platforms (CEX), there are also decentralized exchanges (DEX) in the crypto market, which take a completely different approach to make transactions.
The former store users’ assets and act as a kind of intermediary in transactions with assets, while others resemble a bulletin board where investors place orders to buy and sell digital assets and then interact directly with sellers and buyers to complete transactions.
Simply put, this format of work reduces the risk of losing funds when a trading platform is hacked. In the case of centralized platforms, users essentially do not control their funds, since they are located on the addresses of the trading platform.
If someone promises you a “crypto” for free, this is almost a sure sign that, on the contrary, they are going to steal it from you. For example, recently one crypto investor lost more than $1 million in bitcoins by sending them to attackers who promised him to double his investment. Fraudsters used the name of one of the largest cryptocurrency holders, Michael Saylor, for fraud.
Similar fraudulent projects often use this scheme, acting on behalf of famous people such as Elon Musk, Steve Wozniak, and others.
At the same time, the cryptocurrency transferred to someone’s account is almost impossible to return. This is how blockchain technology works: all crypto investors have equal rights and there is no administrator on the network who could cancel transactions or suspend their execution.