To enter the stock market, you need to become a broker’s client. This will allow the investor to buy and sell securities. At the same time, most of the organizational nuances are taken over by the broker, providing users with easy access to investment instruments. Working with the cryptocurrency market takes place in a different format, which requires an investor to dive deeper into the industry, writes RBC Crypto.
When using a cryptocurrency wallet for the first time, you need to understand that it works with two types of keys — public and private. A private key is a key that is used to sign transactions. It is this key that should never get to third parties, because with its help they can access the funds stored on your wallet.
Before choosing a wallet for storing digital assets, you need to decide on another important point — the private key storage system. Some wallets, such as Metamask, store private keys only on the user’s device. In turn, most online wallets (and crypto exchange repositories) prefer to store private keys on their own servers. This creates additional risks, since hackers often target the hacking of online cryptocurrency wallets in order to seize users’ funds.
In the cryptocurrency market, in addition to traditional centralized trading platforms (CEX), there are also decentralized exchanges (DEX) that use a completely different approach to making transactions. Centralized platforms store users’ cryptocurrencies and act as an intermediary when performing transactions with assets. To start trading on a centralized exchange, it is necessary to transfer cryptocurrency to the platform’s accounts. After that, the user does not actually control his funds, since they are located at the addresses of the trading platform.
Decentralized exchanges adhere to a different algorithm of operation and do not store users’ cryptocurrencies. Such platforms can be compared to ad services, where users place orders for the purchase and sale of digital assets, and then interact directly with sellers and buyers to make transactions. This format of work reduces the risks of losing funds when the trading platform is hacked.
“Profitable” offers from scammers regularly appear on the Internet. For example, recently one crypto investor lost more than $1 million in bitcoins, sending them to attackers who promised to double his investments. The scammers used the name of Michael Saylor, the head of Microstrategy, well-known in the cryptocurrency community, to attract victims. Such fraudulent projects often use such a scheme, acting on behalf of famous people such as Elon Musk, Steve Wozniak and others.
When sending cryptocurrencies to scammers, it is almost impossible to return funds, since this is the peculiarity of the blockchain. All crypto investors have equal rights and there is no administrator in the network who could cancel transactions or suspend their execution.