Do you protect your actual wallet containing your hard earned cash, credit cards and ID?
If you’re happy speculating on cryptocurrency with the same carefree financial attitude you have to gambling away on bet366, casinoroyale or pokerface then this opinion article probably isn’t for you.
Crypto currency is stored in an electronic wallet. If that’s on your personal computer, usb drive or external drive -a cold wallet -then apply the 10 steps to cyber security – passwords, firewalls, anti malware (you don’t want someone encrypting your crypto!) and backups you can actually get back and no-one else has access to.
You can go as far as writing down your private key codes and storing them in a safe / bank vault.
You most likely will use a crypto currency exchange. They hold your money like a regulated broker would hold your shares. There are many around and you should evaluate them before entrusting your cash to them
- What are the transaction costs – you will pay them a commission every time you buy or sell cryptocurrency to them
- What are their buy/sell prices like, bit like airport currency exchange rates are notoriously bad even if the commission rates they also deduct are reasonable
- Find independent online reviews as to how easy others find them to use.
- Difficulty creating an online account in the first place can be a red flag – do they use a 2 factor login?
- How fast are transactions processed – times of hours and you could miss the boat if you need to bail out or pile in quickly
- How many real currencies can you trade in / out of, you may loose money by converting GPB to USD first and then into crypto.
- How many different crypto-currencies can you deal in?
- How do you access your online wallet – Windows, Android, Mac, IOs?
- Try and assess security around their website (https) and backoffice servers and systems – do they follow the 10 steps or have any ISO certification
- Have they already been subject to any data breaches/hacks?
- What happens if your crypto is stolen, is there any recompense or insurance?
- What is uptime and availability, what if the exchange/website goes down through traffic volumes when you need to buy/sell quickly?
- Do they allow peer to peer trading where buyers and sellers are matched to each other, a little like transferwise.com for ‘proper’ currencies
As a final observation the FCA (Financial Conduct Authority) have rejected Bitcoin’s description as a currency, instead treats it as a commodity which they do not regulate. (Dec 2017)