The blockchain, where cryptocurrencies are registered, has security that is difficult to break.
In addition to the blocks being all encrypted, to make a change to the network, all computers would need to approve, and the individual would have to rewrite all blocks after that, which should also be approved.
But is it possible for someone to steal your digital coins? This happens quite often, but not on the blockchain.
Scams are typically targeted at brokerages and individuals through phishing, which is a social engineering technique that tricks the victim into providing sensitive data, or even through information hijacking (data leakage) that request ransom payment with cryptocurrencies.
That’s why it’s important to know that there are ways to handle cryptocurrencies more securely.
Still, this is not the only risk of the cryptoactive. We will tell you the other risks and advantages in the next topic.
Advantages and risks of investing in cryptocurrencies
- High profitability potential
- Investment portfolio diversification
- Easy accessibility for investment
- Growth in popularity
- Blockchain security
- High volatility
- Constant target of scams and frauds
- Lack of government regulation
As we realize the potential of cryptocurrencies is great and its risks can be calculated.
For volatility, you can use diversification protection, for example. And the investor should only invest the amount that he feels comfortable seeing diluting in the event of an event.
Analysts do not recommend exposure above 5% of the portfolio, even for those with an aggressive profile.
With regard to security, although they are a constant target of fraud and scams, cryptocurrencies have their means of making the whole process more secure and transparent. And the way is through the blockchain.
To ensure that no one steals your cryptocurrencies, prefer to keep it in a digital wallet than to leave it with cryptocurrency brokers (Exchanges), or prefer a company you trust completely.
As a writer, Richard is an advocate of blockchain technology and cryptocurrency in general. He writes about all things from cryptography to economics, with a focus on how it applies to cryptocurrencies. He is also passionate about writing about topics such as decentralization, open-sourced software development, and copyright law.