Cryptocurrency is considered an asset as valuable as any money in your bank account and any items in your safety deposit box; the only difference is that it is digitally earned. Perhaps the safest instrument to transfer value between anonymous parties within network, still keeping and trading cryptocurrency can be a risky affair. As a digital crypto-asset, it does not have to worry about the many usual issues vexing paper money, but faces challenges unique to its own nature. It is a major target for hackers because a lot of people are too complacent to secure their crypto-asset safely and correctly.
Due to the unregulated nature, an exchange can be shut down any time, taking all assets. Exchanges hold hundreds of millions of dollars-worth of assets which become the major targets for hackers. On top of everything, be reminded: DO NOT leave your assets on exchanges. Many people have lost all their assets due to simply leaving them in exchanges.
Have control where you store your crypto-asset. Having your personal keys on a certain wallet where you kept your asset may put you less likely to be at risk; in addition to it, encryption may add to its security than leaving it to an exchange or online that is controlled by third party. The golden rule in crypto world is, if you don’t control the keys, you don’t control your assets. Furthermore, use hardware or cold wallet because the only way for others to access it is to have a physical access to where they are stored.
DO NOT forget to keep at least one offline backup of all your wallets, may it be hardware wallet or cold wallet, like USB or physically write down/print out your private keys and store them in a safe place.
It takes prudence for every transaction. Due to cryptocurrency nature any transactions are irreversible. Moving assets around can be easy yet prone to errors or sometimes sending can be to the wrong address. Do an increment when sending it to test accounts and take extra prudence.
Simply, the success and safety of your asset depends on how you take extra effort to safeguard it from intruders and takers. It is your sole responsibility to manage it and keeping transactions always safe and secured. We are living in the era of cryptocurrency and with this increased attention comes increased risks. Hackers are always on the lookout for some easy money and you must take extra care that your money doesn’t end up in the wrong hands.
Here at Camuso CPA PLLC, we do have the ability to offer cryptocurrency tax help to our clients. If you are interested to know more about crypto-investment and how this might benefit your business, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answer any questions you have.