4 ways to protect your cryptocurrency

The news that the QuadrigaCX cryptocurrency exchange has died as a result of clients' inability to access $ 190 million in bitcoins and other funds is alarming to investors. The founder says that the passwords to access cryptocurrencies are unknown, leaving investors with few remedies. The continued hacking of digital currency exchanges is another concern. Bitcoin and other virtual currencies remain a very popular target for hackers because hiding their tracks is simple as their fingerprints can be digitally erased. Digital currencies remain unregulated by a government entity or central bank, leaving investors without legal recourse when an account is hacked. So, here are 4 tips to protect an investment in cryptocurrency.

Use portfolios of known sources

An increasing number of portfolios of lesser-known companies offering attractive features are masked malware. Choose a regulated exchange because adequate security mechanisms are more likely to exist, experts say. QuadrigaCX had to face liquidity problems for months and anyone who had done a little research online would understand it. Almost all the companies in this space are start-ups and not controlled by financial regulators that are "light" enough.

Study and don't stop at appearances

Cryptocurrency wallets are not physical; rather, a "secret" is used to authenticate the user. A common way to encrypt the secret is with a password, but if the password is lost or forgotten, the cryptocurrencies associated with this secret are lost forever. There are a variety of wallets on the net that can be accessed easily. Each type of electronic wallet has its pros and cons. In general, hardware wallets, which are physical wallets that store the user's private keys, are probably the most secure. But if this type of wallet is lost, there is no way to recover it.

Store your coins in an "external" wallet

An offline hardware device such as USB or hard drive avoids storage in an online exchange. The basic idea is that cryptocurrency investors need to be able to see and hear their money. QuadrigaCX's situation is a good example of one type of risk, but another more common threat is represented by hackers who regularly target online exchanges, wallets and other storage methods to steal currency. USB devices have buttons that require users to confirm or cancel transactions by tapping on the device, which ensures that no hacker can record the keys pressed.

Don't store all your cryptocurrencies in one place

This is similar to any standard investment advice, you should never keep all the eggs in the same basket. In case of loss of an exchange for any reason, you can protect your investment and minimize the impact of any losses by explaining where currencies are stored and how you manage them. Although this takes longer and keeps track of things differently, it is a safer risk management strategy.