Cryptocurrencies offer significant potential to diversify your portfolio and earn higher returns than other investments, but they also carry an additional risk of hacking and digital theft. In this article, we’ll break down the basics of Bitcoin buying safety so you can take your first steps in the crypto market confidently and protect your investment.

When you purchase or receive cryptocurrency, you’re given ownership of that amount in the form of a public and private key. The public key is your wallet address, and the private one is used to decrypt information on the blockchain and access your funds. Since the blockchain is immutable, your cryptocurrency cannot be stolen from the public ledger itself, but if you keep your coins in hot wallets or third-party apps that store your keys, they are vulnerable to hackers.

Bitcoin Buying Safety: How to Avoid Common Scams

Unlike other asset classes, exchanges that hold crypto assets don’t have the same level of regulation as financial institutions, so it’s important to check how secure they are before storing your funds there. Additionally, some exchanges commingle or rehypothecate their users’ assets, which can put your investments at risk of being stolen by hackers and can make it difficult to recover your money if the exchange goes out of business.

Finally, it’s important to remember that cryptocurrencies are still in development and may experience issues as they grow. Always be aware of the risks and consider talking to a tech-savvy friend before investing in anything new. It’s also a good idea to avoid FOMO, or the fear of missing out, when making financial decisions. Giving in to this irrational emotion can lead you to make impulsive choices that could cost you.