Cryptocurrencies currently seem to be replacing real currencies. The hype surrounding Ethereum and Bitcoin is growing all the time, with the price of the latter already increasing at the beginning of the year. Investors see great potential and cooperating companies are also favoring Bitcoin and Ethereum as a potential future means of payment.
Experience with Bitcoin Code and other systems shows that the Bitcoin hype does not stop at private individuals. But are cryptocurrencies such as Bitcoin and Ethereum actually secure or is there a hidden risk?
The volatility of cryptocurrencies
Price fluctuations occur everywhere. With cryptocurrencies, however, the volatility is enormous. The best example of this is Bitcoin. While it was worth less than 1 euro at the beginning of its development in 2009, it increased enormously after a few years.
However, the development of the digital currency was not uniform. On the contrary, there were more frequent slumps and therefore enormous price fluctuations. As a result, bitcoin is always quiet until it reaches its next price high.
The reasons for this are manifold and primarily linked to news coverage. As soon as the news reported a positive price trend for the cryptocurrency, more traders jumped on board. Investors were also attracted and this development encouraged a further rise.
Those who invested at the beginning of the Bitcoin era began to see Bitcoin as a lucrative source of income when they saw the enormous profits. Many cashed in on the profits as the price rose. The price of Bitcoin subsequently fell radically. In the meantime, the topic of Bitcoin has become inextricably linked with the technology behind it.
The blockchain technology
Blockchain technology is the mother of cryptocurrencies. It has numerous advantages. An important core element is security. This is far greater than with traditional banks. Banks are centrally organized. If this central point is attacked, all accounts and therefore all savings deposits and credit balances are at risk. This cannot happen with blockchain, as it is decentralized.
Encryption technology is what makes the blockchain. It is what ensures anonymous data transfer - because cryptocurrencies are nothing other than data - as well as protection against loss. Topics such as data protection and transparency are at the top of the agenda, even if they may sound contradictory. Both are part of the new age and enable the secure transfer of digital money.
Numerous crypto enthusiasts are enjoying the new technology due to its security and simplicity, as well as the fact that there is no need to open an account. Above all, however, investors and large corporate sectors benefit from the security of blockchain technology.
So far, they have not been able to fully benefit from the use of the blockchain and thus the use of cryptocurrencies. This in turn has to do with price fluctuations. The more investors and companies know about the blockchain, the more stable the price will be.
As a result, more and more people are opting for Bitcoin, Ethereum and other cryptocurrencies. The result is even more security, as more and more IT companies are addressing the issue and starting to integrate it into everyday life.
The importance of the wallet
Anyone who has euros - whether in the form of banknotes or hard cash - needs an account or a wallet to store them. The same applies to cryptocurrencies. The wallet was created to store digital currencies. The wallet is a type of virtual purse that traders need in addition to an account on a trading platform.
After the purchase, it is important to fill the wallet with the coins and not leave them in the account with the trading platform. This keeps the coins safe if hackers attack the trading platform. Some also use a special USB stick to store coins in the wallet.
Seriousness is what counts
Trends always give rise to people and groups of people who want to profit from them. In some cases, criminal machinations come to light. It is important to be aware of these in order to protect yourself from such offers in the long term. Seriousness begins with the location of the company, which promises high returns.
Such promises should generally be accompanied by a precise check of credibility. If the provider is located abroad, it is essential to refrain from opening an account. Interested parties can find the company's registered office in the 'Imprint' section. If this is completely missing or does not comply with the applicable law, you should also refrain from opening an account in this case.
At the same time, comprehensive knowledge of the provider should be available. If the provider promises 'further information following registration', criminal activity must also be assumed. The same applies if the source of the information is in an email and it was not requested as part of a newsletter. Bitcoin and co. are technically secure, but some people shamelessly exploit the system. In this way, credibility is shaken.
Important tips for cryptocurrencies
A few precautions are not enough to ensure that cryptocurrencies are optimally secured. For example, if you want to store the wallet on your PC or smartphone, you should secure the respective device in advance. It is even better to use a special USB stick to store coins.
Nothing can happen with the offline key, even if the USB stick is lost. This key secures access to the coins. This makes it all the more important to keep this key safe. The key is a special character string. It is important to make a note of this character string and keep it in a safe place.
Many people make the mistake of saving the offline key on their hard disk or storing it on their smartphone. It makes far more sense to write it down by hand and choose a well-considered storage location. This should not be accessible to other people. Of course, it is also possible to open an online wallet in addition to the hardware wallet. However, this option is not advisable.
Anything that is available online poses a potential risk to data protection. As soon as the site is attacked and the coins are gone, the investor usually receives no credit. It is therefore better to store the wallet offline.
If you have a lot of coins, you should also seek advice regarding your assets. After all, it is also important to make the coins available to partners or family members in the event of death. In addition, reputable financial advice can even increase the financial framework.
Have the purchase contract checked
