We explain in simple terms how to start working with the crypto asset market and secure your investments
To enter the stock market, you must become a client of a broker. This will allow the investor to buy and sell securities. At the same time, most of the organizational nuances are taken over by the broker, providing users with easy access to investment instruments.
Working with the cryptocurrency market takes place in a different format, which requires the investor to dive deeper into the industry.
Private keys
When using a cryptocurrency wallet for the first time, you need to understand that it works with two types of keys – public and private. A private key is a key that is used to sign transactions. It is this key that in no case should get to third parties, since with its help they can access the funds stored on your wallet.
Before choosing a wallet for storing cryptocurrency , you need to decide on another important point – a system for storing private keys. Some wallets, such as Metamask, only store private keys on the user’s device.
In turn, most online wallets (and crypto exchange wallets) prefer to store private keys on their own servers. This poses additional risks, as hackers often aim to break into online cryptocurrency wallets in order to take possession of users’ funds.
Working with exchanges
In the cryptocurrency market, in addition to traditional centralized trading platforms (CEX), there are also decentralized exchanges (DEXs) that use a completely different approach to making transactions. Centralized platforms store user cryptocurrencies and act as an intermediary in transactions with Crypto.
To start trading on a centralized exchange, you need to transfer cryptocurrency to the site’s accounts. After that, the user does not actually control his funds, since they are located on the addresses of the trading platform.
Decentralized exchanges follow a different algorithm of work and do not store users’ cryptocurrency. Such platforms can be compared to ad services, where users place orders to buy and sell crypto assets, and then interact directly with sellers and buyers to complete transactions. This format of work reduces the risk of losing funds when the trading platform is hacked.
Phishing
On the Internet, “profitable” offers from scammers regularly appear. For example, one crypto investor recently lost over $1 million in bitcoin by sending it to scammers who promised to double his investment.
Fraudsters used the name of Michael Saylor, the head of MicroStrategy, well-known in the cryptocurrency community, to attract victims. Such fraudulent projects often use this scheme, acting on behalf of famous people such as Elon Musk, Steve Wozniak and others.
When sending cryptocurrency to fraudsters, it is almost impossible to return the funds, since this is the peculiarity of the blockchain. All crypto investors have equal rights and there is no administrator on the network who could cancel transactions or suspend their execution.
