As digital currencies such as Bitcoin, Ethereum, Bitcoin Cash and XRP gain legitimacy, it's natural for investors looking for asset diversity to dip into this newest of asset classes. Recent price declines across the cryptosphere might also tempt traders looking for good entry points.
But negative headlines about cryptocurrency scams, dodgy exchanges and other criminal schemes have left many reluctant to enter the space. And indeed, from scaling issues to safety on the operational and technical side of trading, there are a number of things even savvy investors should be aware of.
After reading this post, one reader recently tweeted:
"Where is the safest place to buy XRP?"
For all cryptocurrency trading, Casey Kuhlman, CEO of Monax, says, begin by considering the credibility of the exchange and focus on the software. He stresses that “trust and credibility” are perhaps two of the most important factors to focus on when deciding on the best crypto exchange to work with.
“I would recommend that regardless of the exchange chosen, all users install reliable antivirus software, in addition to applying operating system patches and antivirus definition updates as soon as they are released. Users should always ensure that they’re backing up their data to offline storage sites on a regular basis. As with all transactions done online, I would recommend using a VPN - virtual private network - to trade, as your wifi isn’t always as secure as you think.”
When purchasing cryptocurrency, Paul Puey, CEO and co-founder of Edge, notes that there are many and varied choices. Best options will depend on a user's desire for security, cost, speed, and simplicity.
“On one end of the spectrum are fully centralized order matching exchanges, which can give you very close to spot prices but require understanding trading order types and may have long delays in account verification and withdrawal. They also compromise security, due to funds being held by a custodian. With central exchanges it is important after trading to move funds onto a user-controlled wallet.”
Daniel Schwartzkopff, CEO, Invictus Capital provides additional detail on the a number of things to keep in mind when choosing an exchange. He provides nine factors to note:
Perhaps the most important security decision any crypto investor can make is whether to leave their assets in 'cold storage' says Cobus Kruger, CEO of Stackr. The term means keeping digital assets offline, on a USB drive, for example or other data storage option. Storing cryptocurrency on an exchange is often referred to as 'hot storage.' He points out that both methods have their problems:
“There are issues around both. The ideal scenario is to use third party storage at an independent custodian [which could also] provide access to capital and digital asset investments in a single place.”
Crypto exchanges are also evolving, according to Stefan Neagu CEO of Persona, which means security keeps improving. Despite this he continues to believe that investors aren't focused on putting their own security first. “I doubt that most people would choose the most secure exchange, if the higher volume is on another exchange, even if it's less secure.”
Disclaimer: The information provided above is for research purposes only. It should not be taken as a recommendation or endorsement. Do your own due diligence.
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