What risks you need to know about before the start?
Along with economic benefits, any new technology also comes with a certain number of problems. Cryptocurrencies are no exception.Cryptocurrencies are basically the same as e-money — like WebMoney or PayPal. That means they also have the same problems as classic e-payment systems.
However, the operating principles specific to cryptocurrencies sometimes make the problems more likely to occur, and thus more disturbing. In addition, the same principles are responsible for a certain number of risks unique to cryptocurrencies.
Avoid spoofing payment information and phishing
It has been noticed when people copy other person’s wallet address for transfer third party malware may replace the address in the clipboard with another one. That is why every user needs to double check an address after copying it, even when it is a long jumble of characters. Every case is individually investigated. Never go to phishing web-sites, do not upload your cryptowallet and don’t enter password.
ICO – Initial Coin Offering became popular in 2017. You don’t hear much about successful projects but ICO owners are still looking for optimistic investors. We cannot stop you from investing but we need to warn you that the fact that someone has an idea doesn’t mean the idea is good, will make profit or that the author will spend the money on implementing it.
If you are the author then keep in mind even the simpler scheme. There are too much skilled hackers that get access to the web-site when collection is opened and simply replace the wallet address to theirs one.
With a centralized clearinghouse guaranteeing the validity of a transaction comes the ability to reverse a monetary transaction in a coordinated way; no such ability is possible with a cryptocurrency. This lack of permeance is further demonstrated as Bitcoin accounts are cryptographically secured, access to monies contained in an account almost certainly cannot be restored if the “keys” to an account are lost or stolen and subsequently deleted from the owner.
Some countries may prevent the use of the currency or may state that transactions break anti-money laundering (AML) regulations. Due to the complexity and decentralized nature of Bitcoin and the significant number of participants — senders, receivers (possibly launderers), processors (mining and trading platforms), currency exchanges—a single AML approach does not exist.
How to avoid risks?
1. Always verify a Web wallet’s address, and don’t follow links to an Internet bank or Web wallet.
2. Before sending, double-check the recipient’s address (at least check the first and last characters), the amount being sent, and the size of the associated fee.
3. Keep a cool head and make informed decisions when crypto-investing, and don’t panic or hurry.
4. Always remember that crypto-investment is very risky. Do not invest more than you’re ready to lose at any moment. Diversify your investments.
5. Run high-quality antivirus protection to protect the devices you use to access cryptowallets, trade on crypto-exchanges, and so on.
6. Make sure your country's regulations do not prohibit you from conducting cryptocurrency transactions.