What Makes Cryptocurrency Secure
New investors have a lot of questions about cryptocurrency. One of the most commonly-asked questions is whether or not cryptocurrencies are secure. After all, cryptocurrencies like Bitcoin, Litecoin, and more are decentralized forms of payment. Without the backing of traditional banks and regulators , how does cryptocurrency stay secure?
First and most importantly, cryptocurrency stays secure thanks to encryption. In fact, that's how cryptocurrency got its name -- crypto basically means “encrypted”. For each transaction, cryptocurrency uses encryption for verification. Encryption is also used during the storage process.
But what is encryption? It's a way of encoding information by scrambling data so that only authorized parties can read it. Though this process does not make hacking impossible, it does make it a lot more difficult.
Furthermore, cryptocurrency transactions require other protections such as passwords. When you work with cryptocurrency, make sure that you choose a secure password with a mix of capital letters, lowercase letters, numbers and special characters to further protect your investment.
The Right Cryptocurrency Wallet
You can also take other measures to keep your cryptocurrency safe. For example, where you store your cryptocurrency makes a difference. Cryptocurrency is stored in digital wallets, and you have a choice in the type of wallet you use. Some wallets are "hot," which means that they connect to the internet. Other wallets are "cold," which means that they have no internet connection. While hot wallets are more convenient, cold wallets provide the most security because hackers can't reach them using the internet. Check out our last blog post for a discussion about digital wallets.
The Right Cryptocurrency Source
The right cryptocurrency source can add even more security to your investment. For example, some banks have their own cryptocurrencies. These bank-backed cryptocurrencies may provide a more stable investment than decentralized options.
Other banks simply offer cryptocurrency investment help. They may not have a cryptocurrency of their own, but they still have experts who understand the market. If you get help from one of these banks, you can get someone on your side who can offer advice on cryptocurrency security and how you can keep your investment safe. Make sure to do your homework and don't be fooled by get-rich-quick memes on Twitter or TikTok.
Getting Started With Cryptocurrency
Of course, to get started with bank-supported cryptocurrency help, the first step is finding a bank that offers such help. Getting help from a bank -- especially a community bank -- may be your best bet for making secure cryptocurrency investments.
However, not every bank offers this kind of help. In fact, many of them avoid cryptocurrency altogether. So, how can you find a bank that offers cryptocurrency help without wasting your time at banks that don't? Bank databases can help. For example, this Bundlefi database lets you search for banks that fit your own criteria. Plus, this list only features community banks and credit unions, so you won't get stuck with a large corporate bank that ignores your personalized needs.
Again, take some time to do your research. The more research you do upfront, the more confident you'll be in your investment decisions.