Staying safe in crypto - what users in Poland need to know
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The cryptocurrency trading and lending landscape in Poland has traditionally been one laced with skepticism, with Polish government officials voicing their concerns about the risks associated with crypto quite publicly. As it stands around 900,000 thousand people own cryptocurrency in Poland, equating to about 2.5 percent of the population. Broader crypto adoption across Poland can be achieved by dispelling the negative connotations around the industry.
Polish regulators are also in the process of trying to implement rules and regulations regarding digital currencies in the region with the country’s prime minister, Mateusz Morawiecki, calling for a ban on cryptocurrency trading as a whole. Such aversion to crypto has caused concern for potential investors or traders in the country who are unsure as to how to make safe and secure investment choices in digital assets. To aid the Polish investor, there are several key steps that can be taken to reduce risk when entering the world of crypto trading.
Research before buying
For an unseasoned crypto investor, it is easy to get caught up in the hype and fall for scams or trust the wrong exchange. To avoid investor hardship, it is crucial to research your cryptocurrency of choice before parting with a cent. If you don't understand what you're investing in, you will likely make bad decisions and lose money. Don’t invest in a cryptocurrency simply because it gained overnight popularity on the internet and you are worried about missing out on the next big thing. Instead, look for a project's whitepaper and read it.
A project’s whitepaper will outline the project's purpose and how it will benefit investors. From there, do your standard checks on a project’s online presence. It is active on Twitter, Reddit, or Discord? If not, look elsewhere for investment opportunities. Remember, legitimate crypto projects are active and transparent, and should share detailed analyses and statistics on its cryptocurrency and blockchain.
Choosing the right exchange
Once you have settled on the project and token you plan to invest in, the next step is choosing the right crypto exchange to buy, trade and hold these assets. This can be a daunting process, with an overwhelming amount of choices out there. For many, a centralized exchange offers the most accessible route into crypto and the good news is that there are many out there that value security and transparency for their users - and there are ways to spot them.
One way is to check whether the exchange you are interested in shows Proof of Reserves (PoR). PoR is a way to verify that an institution (e.g., a crypto exchange) holds sufficient reserves backing all customer balances. This acts as a safety blanket for customers, assuring them that the crypto company is not at risk of a liquidity crisis and that customers can withdraw their funds at any time. Customers should ensure there are customer protection funds they can avail of when choosing an exchange. A protection fund protects customers against stolen or lost assets or any suspicious activity on a user’s account outside of their control, and can be a useful tool for new joiners in the space.
Best ways to store your assets
Figuring out the best ways to store your digital assets can be tricky. When you buy cryptocurrency from exchanges, apps, or stock brokers, they typically put it in a custodial wallet they control - meaning the exchange or app holds on to the private key and is responsible for safeguarding a user's funds. However, it is still worth understanding the basics of securely storing digital assets - and to do this you will need to understand hot and cold wallet storage.
The main difference between hot wallets and cold wallets is that hot wallets are connected to the internet through your computer or phone while cold wallets are hardware devices that can keep your data offline. There are pros and cons to both. For instance, hot wallets are easier to use but more vulnerable to online attacks. Cold wallets, on the other hand, are designed to be immune to hacking but the trade-off is your assets are less liquid and harder to trade quickly.
Ultimately, if you are interested in both a safe and convenient crypto storage method a hybrid of both is the best avenue to take.
Learn the ways of the crypto world
Just like everything else, entering and learning about a new market takes time but there are some measures new or first-time investors can avail of when entering the crypto space. For example, copy trading is ideal for new investors as it allows you to build an automated mechanism for making trades by copying the investment decisions of a seasoned trader that you trust. This essentially removes the need for new investors to continually analyze the price of cryptocurrencies and market trends. This offering is supported by certain crypto exchanges and can ease the transition to digital assets trading for those with no prior experience.
With all of this in mind, it is important to remember that a level of due diligence is required when working with volatile assets such as crypto. Don’t invest before researching a project and don’t overlook the security of any exchange or broker you’re using. However, just like any other kind of investment, once approached responsibly crypto can be a great investment with rather high returns.
