Once you have purchased cryptocurrency, you need to store it safely to protect it from hacks or theft. Usually, cryptocurrency is stored in crypto wallets, which are physical devices or online software used to store the private keys to your cryptocurrencies securely. Some exchanges provide wallet services, making it easy for you to store directly through the platform. However, not all exchanges or brokers automatically provide wallet services for you.
There are different wallet providers to choose from. The terms “warm wallet” and “cold wallet” are used:
Hot Wallet Storage: “Hot Wallet” refers to crypto storage that uses online software to protect the private keys to your assets.
Cold Wallet Storage: Unlike hot wallets, cold wallets (also called hardware wallets) rely on offline electronic devices to securely store your private keys.
Generally, cold wallets charge a fee, while hot wallets do not.
What can you buy with cryptocurrency?
When it was first launched, Bitcoin was intended to be a medium for daily transactions, making it possible to buy everything from a cup of coffee to a computer or even big-ticket items like real estate. That hasn’t quite materialized and, while the number of institutions accepting cryptocurrencies is growing, large transactions involving it are rare. Even so, it is possible to buy a wide variety of products from e-commerce websites using crypto. Here are some examples:
Technology and e-commerce sites:
Numerous companies that sell tech products accept crypto on their websites, such as newegg.com, AT&T, and Microsoft. Overstock, an e-commerce platform, was one of the first sites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.
Some luxury retailers accept crypto as a form of payment. For example, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.
Some car dealers – from mass-market brands to high-end luxury dealers – already accept cryptocurrency as payment.
In April 2021, Swiss insurer for all its lines of insurance except life insurance (due to regulatory issues). Premier Shield Insurance, which sells home and auto insurance policies in the US, also accepts Bitcoin for premium payments.
If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a cryptocurrency debit card, such as BitPay in the US.
Cryptocurrency fraud and cryptocurrency scams
Unfortunately, cryptocurrency crime is on the rise. Cryptocurrency scams include:
Fake Websites: Fake websites featuring fake definitions and corrupt jargon promise massive, guaranteed returns, provided you keep investing.
Virtual Ponzi Schemes: Criminals of cryptocurrency promote non-existent opportunities to invest in digital currencies and create illusion of huge profits by paying old investors with new investors’ money. In a scandalous operation, the Butt Club Network raised more than $ 700 million in December 2019 before indicting its perpetrators.
“Celebrity” endorsements: Scammers pose online as billionaires or well-known names who promise to multiply your investment in a virtual currency but instead steal what you send. They may also use messaging apps or chat rooms to start rumours that a famous businessperson is backing a specific cryptocurrency. Once they have encouraged investors to buy and driven up the price, the scammers sell their stake, and the currency reduces in value.
Is cryptocurrency safe?
Cryptocurrencies are usually built using blockchain technology. Blockchain describes the way transactions are recorded into “blocks” and time stamped. It’s a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions that’s hard for hackers to tamper with.
In addition, transactions require a two-factor authentication process. For instance, you might be asked to enter a username and password to start a transaction. Then, you might have to enter an authentication code sent via text to your personal cell phone
Four tips to invest in cryptocurrency safely
Before investing, learn about cryptocurrency exchanges. It is estimated that there are more than 500 exchanges to choose from. Do your research, read reviews, and talk to more experienced investors before moving on.
Know how to store your digital currency:
If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
Diversify your investments:
Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.