Cryptocurrency has become increasingly popular over the last few years. It is regularly traded on online exchanges, used on gambling websites, for online shopping and remitting funds overseas to friends and family. For some, it is used on a daily basis. Even some major retailers and utility companies have started accepting bitcoin and cryptocurrency as payment. Despite this, the average person still has no idea how it actually works, neither how to obtain cryptocurrency nor how to utilize a crypto wallet. Fortunately, as adoption increases, wallets and exchange are becoming more user-friendly, and there are an increasing amount of helpful guides and videos for newbies. Still, the security and safety of cryptocurrency remains a concern for many, and rightly so. Here, we’ll discuss some basic tips on how to keep your coins safe and avoid common scams.
Virtual Currencies have proliferated through online trade, gaming, gambling and, for some, everyday use. Even some major retailers and utilities have started accepting cryptocurrency. Despite this, most people remain unaware of how they work, how to get them or how to use them. The learning curve continues to even out as systems are streamlined and made more user-friendly – allowing for more people with varying backgrounds to use cryptocurrency. Still, the security and safety of these currencies remains a concern for many people.
Here, we will discuss how to keep your cryptocurrency safe and how to avoid scams.
How to safely buy Bitcoin
When you are new to crypto, you are in a vulnerable position and can easily be taken advantage of. Therefore, the first time you purchase crypto should be either from a business with an excellent reputation or a trusted friend or family member. This means not buying from a stranger off craigslist, Facebook Marketplace, Telegram, or any other social media channel. This also means only using exchanges that have extensive positive reviews.
If purchasing from an exchange, you have the option of either using an online platform or a local brick-and-mortar location. Online exchanges have the advantage of being quick, not needing to leave your house, and low fees. Furthermore, you may not live close to any retail locations. A few reputable online Canadian exchanges to check out are Shakepay, Newton, and Paytrie.
Most major Canadian cities also have one or two local brick-and-mortar businesses where you can come in and buy or sell cryptocurrency in-person. One such example is VCX (Vancouver Cryptocurrency Exchange). You’ll notice a professional website, an accumulation of positive Google reviews over time, and, if you contact us, knowledgeable and courteous staff. This is what you are looking for! One advantage of doing your first trade in-person is that you can receive one-on-one guidance. Similar local exchanges include Bitcoin Victoria in Victoria, BC, and Calgary Crypto Exchange in Calgary, AB.
First, don’t buy from anyone advertising on craigslist under an assumed name, there are far safer places to trade. At one point exchanges ran under the regulatory radar, now they’re registered businesses and beholden to rules and guidelines. Exchanges can be local or online, they have reviews you can see and a customer service number you can call. A reputable exchange is the safest way to get cryptocurrency as a new user.
If someone has cryptocurrency they’re willing to sell you make sure it’s someone you know and trust, someone who will do the exchange in-person and walk you through the process. Then, make sure you’re getting what you want. There are tens of thousands of cryptocurrencies, so stick to established coins with solid development teams behind them, major coins like Ethereum, Bitcoin and BNB.
All coins have a chart you can find online, like a stock, where you can see price changes as they happen. Anyone can make a token and call it whatever they want, so it’s a good idea to look up what you’re buying and make sure you’re getting the right token.
How to safely store your crypto
The first step in keeping your cryptocurrency safe is to make sure you are using an appropriate wallet. A wallet is a program that can be installed on your computer or mobile device with an internet connection – called a Hot Wallet, because the funds are always online and available. A wallet can also be a piece of hardware like a Ledger or a Trezor, called a Cold Wallet because they are offline and can be locked away for safekeeping.
The first step in keeping your cryptocurrency safe is to make sure you are using the right wallet. A crypto wallet is an application on your computer or mobile device with a dual function: it allows you to store your coins, as well and conduct transactions with them (send and receive). Hot wallets are used on devices connected to the internet, like your smartphone or desktop computer. A couple of popular ones are Exodus Wallet and Trust Wallet.
Cold wallets, also known as offline wallets, are installed on a device that will never be connected to the internet. The most common type of cold wallet is known as a hardware wallet: a small, highly secure device that stores your private keys an offline environment. Ledger and Trezor are the two major manufacturers of such wallets. VCX is also of Canada’s few authorized resellers for Ledger hardwallets. You can come by to pick one up, as well as get help setting yours up at our Vancouver office
The Ledger Nano X, a hardware wallet for storing cryptocurrency.
Hardware wallets have an added layer of security and should therefore be where you store the majority of your crypto assets. Because they are slightly less convenient to use; it often makes sense to keep small amounts in a hot wallet that you may need to spend at a moment’s notice – especially if you use Bitcoin or other crypto assets regularly. This way, you don’t need to always have your hardware wallet handy. It’s good practice not to share any device that you use to access your cryptocurrency.
For any amount of cryptocurrency whose value is significant to you, a hardware wallet is the safest option. Since these are small devices which often look like USB keys, make sure to keep it somewhere specific where you won’t confuse it with similar-looking electronic devices and possibly lose it. A locked safe is your best bet.
If you plan on using your cryptocurrency often, then you should use a hot wallet to easily access your funds. If you use your phone or computer to manage your crypto-funds, use Strong Passwords, Two-Factor Authentication and turn off location-based services when conducting a transaction. It’s good practice not to share any device you use to access your cryptocurrency.
For large values of cryptocurrency or funds you don’t plan on accessing very often, a cold wallet is the safest option. Since a cold wallet is a small device that looks like a USB key, you should store it in a safe place where it won’t be confused with any old piece of electronics or lost in the sofa cushions. A locked safe might seem like overkill, but it provides an extra layer of security from other people as well as absent minded mistakes.
Protecting your private keys
The private keys to your crypto wallet are often saved as a series of 12 to 24 words that are shown to you when your wallet is first generated. It is essential that you write these down on a piece of paper, make multiple copies, and store them in safe places you can access and others cannot.
If you lose the device on which your wallet is installed (your smartphone, for example), you can use this recovery phrase to generate the exact same wallet on a new device, thereby giving you access to your Bitcoin. Losing your device as well as your recovery phrase is the main way people permanently lose access to their funds.
If you lose a copy of your recovery phrase then you should immediately create a new wallet and move your funds to that one. Anyone with a copy of your private keys can steal all your coins. Cryptocurrency is anonymous and decentralized so it will be extremely difficult to recover your coins once they are stolen.
Your key is a string of words that allow you to access your wallet from any device with an internet connection. For instance, if you lose your phone or computer with your wallet, you can use your private key to generate your wallet on a new device. Losing a device and forgetting a private key is one of the common ways people lose access to their funds. It’s good practice to write down back ups of your private key and store them in safe places. If you lose a written back-up of a private key, consider moving all your funds to a new wallet to prevent potential theft.
The primary take-away being – if someone has your private key, they can generate your wallet on their own device and move your funds out. Because cryptocurrency is anonymous and largely unregulated, you will likely not get your money back.
How to securely send Bitcoin
Virtual currencies have no physical form, they’re made of data. To make sure that any one person or group can’t manipulate this data, it’s stored as a blockchain, or blocks of data linked by a hash, and backed up across tens of thousands of computers around the world. This is known as a distributed ledger. All the blockchain data on these computers have to match. Once this data is added and verified, it cannot be changed.
While this makes cryptocurrency less vulnerable to an attack than the regular banking system, it also means no backsies. If you send funds to the wrong wallet or send the wrong amount, there is no reversing a transaction already being rapidly logged on countless computers around the world. You can only hope the person you sent it to will give it back, but don’t count on that. You may even end up sending it to an address not owned by anyone, in which case it is definitely lost forever.
When sending Bitcoin to someone, always double check you have the correct address before finalizing the transaction. Similarly, when receiving crypto from someone, always make sure you have provided them with the right address, especially right before they send it.
Virtual currencies have no physical form, they’re made of data. To make sure that any one person or group of individuals can’t manipulate this data, it’s stored as a blockchain, or blocks of data linked by a hash, and backed up across thousands of computers. This is called the distributed ledger – not to be confused with a brand of cold wallet called a Ledger. All the blockchain data on these computers, or distributed ledgers, have to be the same. New data can be added but previous data can not be changed.
While this makes cryptocurrency less vulnerable to an attack, it means No Backsies. If you send funds to the wrong wallet or send the wrong amount, there is no reversing a transaction already being rapidly logged on countless computers around the world. You can only hope the person you sent it to will give it back.
When you trade with someone, always make sure you have the right address and you’re giving the right address when receiving funds.
Additionally, just as there are thousands of cryptocurrencies, there are multiple blockchains with different currencies. So far there are no wallets that support all blockchains or all currencies. Be sure you’re able to receive what someone is sending. For instance, you can’t send Ethereum to a Bitcoin wallet because they’re on different blockchains. If you send the wrong coins to the wrong wallet, the funds could be lost forever.
There are such things as Wrapped Tokens which can move between blockchains, but that’s a subject for another article.
Avoiding getting scammed
Cryptocurrencies can be moved between any two devices, anywhere, instantly. Sending fifty bucks worth of Ethereum to your neighbour is done as quickly and easily as sending it to someone on the other side of the world, anonymously. This makes crypto a great way to move money without having to convert currencies, pay costly fees to transfer funds between different countries, risk having the transaction reversed or account locked by a bank. These features unfortunately make it desirable to scammers as well. Cryptocurrency gives its holders complete freedom and control over their funds at the cost of increased responsibility.
Utility companies or government agencies will never, for anyone reason, call you and ask for cryptocurrency. If this happens to you, they are lying, and it’s a scam. If someone you know starts sending messages asking for cryptocurrency, keep in mind that it’s very easy to make fake social media accounts impersonating your friends and family – so if your distant cousin is asking you for bitcoin on Facebook, it’s time to do some investigating.
Finally, if you’re considering trading cryptocurrencies online, you need to research the platform you’re using. Reputable cryptocurrency exchanges are active on social media, have accessible customer service and are registered businesses with lots of reviews. Fake exchanges are one of today’s most common ways to scam inexperienced crypto users out of lots of money. We’ve seen it happen too many times.
Cryptocurrencies can be moved between any device, anywhere. Sending fifty bucks worth of Ethereum to your neighbour is as easy as sending it to your family member who’s out of town or a friend on the other side of the world. This feature, as well as the relative anonymity and no-backsies technology – which we previously discussed – makes it a great way to move money without having to convert currencies, pay costly fees to transfer funds between different countries, risk having the transaction reversed or account locked by a bank. These features unfortunately make it desirable to scammers as well.
Cryptocurrency gives its holders a great deal of agency over their money at the cost of increased responsibility.
You should know: Utility companies or government agencies will not call anyone out of the blue asking for cryptocurrency. Same goes if someone you know is sending messages asking for cryptocurrency, it’s very easy to make fake social media accounts impersonating your friends and family – so if your distant cousin is asking you for bitcoin on facebook, it’s time to do some investigating.
If you’re considering trading cryptocurrencies online, you need to research the platform you’re using. Reputable cryptocurrency exchanges are active on social media, have accessible customer service and are registered businesses. A crypto exchange should always be able to answer questions and help you with their platform, like any good business.
Remember to have fun
Cryptocurrency is interesting, unique and always changing. The features of cryptocurrency make it a useful tool for anyone, and not only as a way to invest or make money – Millions of people around the world use cryptocurrency daily. The fast development and the spread of cryptocurrency has unfortunately left a lot of people behind, feeling like there are barriers to getting involved. On the contrary, it’s become much easier – and we can show you how to get involved. If you have any questions about getting started with cryptocurrency don’t hesitate to contact us or come visit us at Vancouver Cryptocurrency Exchange (VCX).
Cryptocurrency is interesting, unique and always changing. The features of cryptocurrency make it a useful tool for anyone, and not only as a way to invest or make money – Millions of people around the world use cryptocurrency daily. The fast development and the spread of cryptocurrency has unfortunately left a lot of people behind, feeling like there are barriers to getting involved. On the contrary, it’s become much easier – and we can show you how to get involved. If you have any questions about getting started with cryptocurrency don’t hesitate to contact us or come visit us at Vancouver Cryptocurrency Exchange (VCX).