As digital currencies such as Bitcoin, Ethereum, Bitcoin Cash and XRP gain legitimacy, it's natural for investors looking for asset diversity to dip into this newest of asset classes. Recent price declines across the cryptosphere might also tempt traders looking for good entry points.
But negative headlines about cryptocurrency scams, dodgy exchanges and other criminal schemes have left many reluctant to enter the space. And indeed, from scaling issues to safety on the operational and technical side of trading, there are a number of things even savvy investors should be aware of.
Cold vs. Hot Storage
Perhaps the most important security decision any crypto investor can make is whether to leave their assets in 'cold storage' says Cobus Kruger, CEO of Stackr. The term means keeping digital assets offline, on a USB drive, for example or other data storage option. Storing cryptocurrency on an exchange is often referred to as 'hot storage.' He points out that both methods have their problems:
“There are issues around both. The ideal scenario is to use third party storage at an independent custodian [which could also] provide access to capital and digital asset investments in a single place.”