Crypto was one of the best-performing asset classes of 2021. It drew many new investors, and it has become nearly mainstream.
However, the recent slide in 2022 has some investors worried. That said, many people still use a Canada crypto exchange to buy cryptocurrencies.
It is a great option for the risk section of your investments, and there are many different cryptos to choose from. Take a look at the top eight safe crypto investing practices.
1. Make Sure That You Have a Mix of Storage Wallets
Most of the time, you will have a wallet where you can keep some cryptocurrency on the exchange. You should also have a wallet either online or as a hardware device. If you are holding crypto as an investment, the hardware wallet is a safe place to keep it.
Otherwise, you can keep some on the exchange so that you can buy and sell. They refer to your online wallet as hot storage, while cold storage is in your hardware drive offline. The reason why you need both is that hackers can’t get to your hard drive.
2. Don’t Invest More Than You Can Afford
It is important to remember that cryptocurrency is volatile, and it can increase or decrease sharply within a day. You should never invest more than you can afford to lose. Obviously you won’t plan on losing it, but make sure that you can afford to ride out the highs and lows. Many people panic and sell when crypto is going down, but it often experiences another run. You want to be able to stay level headed, so only invest what you can afford to risk.
3. Cash Out Your Gains
When you go on a Canada crypto exchange, you can buy crypto and cash it out when you make gains. Some people buy it and hold it, but their crypto can rise or fall depending on many factors, including news, tweets, and memes. If you want to make profits, the best thing to do is set goals and cash out when you meet them. Then, wait for the dip and buy it again. If you make enough profits over time, it will level out your risk. This is a strategic way to approach crypto.
4. Be Sure to Diversify Your Holdings
You shouldn’t put all of your money in one cryptocurrency. There are more than a thousand options, and you should consider diversifying. You can choose cryptos that are part of different projects, so you will reduce your risk profile. Some cryptos move in a way that mimics others, so you want to know which ones to consider. Choose different cryptos and diversify your holdings so that you don’t have all of your hopes on one coin doing well.
5. Make Sure You Have Strong Passwords
You should never use your passwords on more than one account, and you need to be especially careful when you are using crypto. Hackers target crypto exchanges, and you have to make sure that you are protected. You should have a unique password for every wallet and account you have, and enable two-factor authentication whenever you can. You can also change your passwords regularly. Never share your passwords.
6. Always Use a Reputable Exchange
When you are deciding which exchange to use, make sure you research the security features so that you know how they protect their data. They should always have SSL/TLS encryption and use multi-factor authentication. You can also use more than one exchange, but make sure that you have different passwords for each. Find out everything you can about a crypto exchange before you use it.
7. Don’t Fall Victim to Phishing Scams
Hackers are ruthless and will try any trick possible to get into people’s accounts. They know that people access their crypto wallets on their mobile devices, and they often use social engineering attacks such as texts, third-party messaging, email, or social media to trick you into clicking on a link. Once you do, they will get control of your account. Make sure that you never click on a link, even if you think that it comes from the crypto exchange. Instead, open a fresh web page and sign in.
8. Don’t Share Your Secret Key
Your secret key works to validate that you are the person sending or receiving digital coins. You should be the only person who knows this key. You should store it offline in cold storage. You will print out the key and make sure that there isn’t any digital trace left.
You usually need to set up a seed that you can use in case you need to recover your private key. This is a series of randomly generated words. You should write it down on paper, and do not store it online. This will keep your crypto very safe because nobody will be able to access it.