Some best methods for protecting cryptocurrency

The topic that we are going to examine now is some best methods for protecting cryptocurrency.

10/31/20220 min read

The digital currency market requires a lot of attention and precision due to the known risks it has. Your assets are valuable and you need to pay attention to many safety tips to keep them. The topic that we are going to examine now is some best methods for protecting cryptocurrency.

Capital security

How to maintain assets is always one of the most important concerns of investors. In the field of safe protection of currencies, cryptocurrency wallets have come to the aid of traders and have provided various services in this regard. Those interested in the exciting market of digital currencies can take the first step to invest in this emerging market by using a secure wallet. Digital currency wallets are software that act as an interface between you and different blockchains and make their transfers possible. You can protect your capital by protecting cryptocurrency in a sensible wallet. Therefore, choosing a suitable and safe wallet is of particular importance.

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Exchange or crypto wallet? Which method is safer?

Due to the uncertain and vulnerable path of the global economy, the popularity of the world of cryptocurrencies is increasing day to day. Many cryptocurrencies work aimed at reducing fraud, preventing sanctions, eliminating middlemen, and preventing excessive money printing and inflation. Blockchain technology, with the slogan of transparency and security, has set a new and revolutionary path for the world economy. Today, Bitcoin and cryptocurrencies in general have attracted a lot of attention. As a result, protecting cryptocurrency (mined) is very important in maintaining the security of this space. In this regard if you intend to buy and sell digital currencies or, in other words, you are a trader, keeping Bitcoin or other currencies in an exchange is a good thing. Of course, considering the high number of hacked exchanges in recent years, protecting cryptocurrency in an offline wallet is much safer. Among the different options, exchanges are the least secure, and offline wallets are the most secure. Despite all these explanations, it should also be considered that it should be easy and fast to enter or exit trading positions.

The best way for protecting cryptocurrency

There are two ways to keep digital currencies: -Custodial method -Non-custodial method When a user keeps his assets on a platform like an exchange, he/she is using a Custodial method. With this method, the user deposits his assets with the exchange. When the user keeps his currencies in a wallet that only he/she has access to, this method is called Non-custodial. The Non-custodial method does not have the risks of the Custodial method. Still, both methods have their advantages and disadvantages and depending on the needs and goals of the user, one of them is suitable for him/her. The Non-custodial method has high security, but there is a big weakness in this method. It takes time to move the currency and make the transaction, and a good opportunity may be lost during this time. Protecting cryptocurrency in the Custodial method has more risks such as being hacked, but this method is more efficient for trading. A general rule is that you should use the Non-custodial method for long-term holding, but for short-term trading, it is better to use Custodial methods. For Non-custodial method storage, the best way to store digital currencies is offline wallets; because they are not connected to the Internet and are not subject to hacking. As a result, they are the safest method.

Is it the right thing to keep digital currency in the exchange?

If you want to be a trader and take advantage of the smallest opportunities, it makes sense to use an exchange. If you want to wait for a suitable opportunity, it is better to keep your assets in an offline wallet or the same Non-custodial method. For derivatives in trading (a type of trading using derivative instruments), traders must create collateral with collateral contracts, which is used as a collateral account for the exchange. If you use platforms like BitMEX, Binance Futures, FTX, or any other exchange that trades derivatives, you must provide them with collateral to trade. Regardless of the type of exchange, placing coins in the exchange is only suitable if you intend to make transactions in the short term.

Conclusion of the best method for protecting cryptocurrency

In this article, we examined the best way to keep digital currencies and explained that there are two ways to store them. Using a wallet is better for long-term storage, while if you want to trade short-term, an exchange is the best way.