Typical mistakes when using cryptocurrencies

If you have cryptocurrency, you need to adapt to a new way of storing money. You can't keep Bitcoin under your mattress or deposit Ethereum in a bank. There are ten common mistakes people make when storing digital currencies.

Error 1: Lack of backup copies of wallet keys

Storing cryptocurrencies is not like storing money in an online bank, where the user can reset or recover the password at any time. Instead, you have a set of private keys that allow you to access the funds in your wallet. You alone are responsible for the security of your keys. And if your only copy of the key is stolen - for example, along with your laptop - you will not be able to get your assets back.

You should create physical copies of private keys and store them in a safe place.

Mistake 2: Lack of two-factor authentication on crypto exchanges

Yes, 2FA irritates many people. However, you need to understand that crypto exchangers are currently a desirable target for hackers, so you need to take all possible security measures since it is your money that is involved. Do not use the services of sites that skimp on security.

Mistake 3: Blind loyalty to one exchange

Stories about hacking of cryptocurrency exchangers lead many people to distribute assets among several companies. There are many crypto exchanges in the world, so why use only one?

Reminder: Never store your cryptocurrency on crypto exchanges! (See error 5.)

Error 4: Failure to provide identifying information

At this time, all banks are required to undergo know-your-customer checks. In the US, this law also applies to crypto exchanges. Even exchangers in other countries apply this rule to comply with American laws when dealing with American clients. 

Here's the catch - some crypto exchanges allow you to deposit money and trade without identification. However, as soon as you decide to withdraw funds, you will be required to verify your data. Obviously, such precautions, among other things, help you protect your account from fraudulent activity. If you want to be absolutely sure that your crypto assets are always available to you, it is better to follow the necessary steps to provide information to the exchanger..

Mistake 5: Using hot wallets to store cryptocurrency

Hot storage wallets are cryptocurrency wallets that are connected to the Internet. This connection is what makes them vulnerable to attacks. Hot storage wallets should contain as little funds as possible. Of course, to trade you need liquid funds with quick access to them. However, it is safest when cryptocurrency is stored in cold storage wallets. 

Mistake 6: Sending funds to the wrong wallet address

It is very easy to get confused when using a cryptocurrency wallet. You must store the public keys of exchanges, offline storage, and all tokens you own. With such a large amount of information, it is entirely possible for a user to accidentally send coins to the wrong wallet.

If the cryptocurrency you are sending is not compatible with the wallet (for example, if you are sending Bitcoin to an Ethereum wallet), there is a high chance that you will be irrevocably you will lose your assets.

Mistake 7: Using public Wi-Fi networks

Never use a public Wi-Fi network (at school, airport, hotel, restaurant) to make cryptocurrency transactions. 

The disadvantages of public networks are well known. There are many ways hackers can use it to obtain your personal information. You need to make sure that only you know your private keys and passwords.

Mistake 8: Using insecure browser extensions

One of the most common (and subtle) vulnerabilities is in browser extensions. Some of these extensions require a large number of permissions in order for them to function. Can you trust them completely?

At the very least, you should not make cryptocurrency transactions using a browser on which you have plugins and extensions installed. Ideally, you should install private browsers and only use them for cryptocurrency transactions..

Mistake 9: Weak Passwords

This is an obvious tip, but it still helps to make sure you use a strong password for your account. If you don't use 2FA, the password is the only barrier between your funds and the cybercriminals who want to get their hands on them. 

Remember, cryptocurrency exchangers and hot wallets do not give you any guarantees. The industry does not yet have any generally accepted rules for recovering funds if you are a victim of theft.

Mistake 10: Don't fall for scams

One of the most important ways to protect your assets is to be wary of scams, scams, and other ways to illegally obtain funds. Unfortunately, scams are very common in the cryptocurrency market. 

As with any situation, if something sounds too good to be true, it's probably a scam. Use common sense and handle cryptocurrency as you would any other financial asset. 

According to makeuseof.com