Research Summary
The report provides a comprehensive guide on how to avoid losing cryptocurrency. It highlights common reasons for losses, including poor understanding of crypto products, falling victim to scams, and tax issues. The report also provides a security checklist and a guide to assess one’s security level, ranging from wallet security to phishing education.
Key Takeaways
Common Reasons for Crypto Losses
- Failure to Sell: Many investors fail to sell their crypto assets at the right time, often missing the peak and eventually incurring losses.
- Poor Understanding of Crypto Products: Investors often lose money due to a lack of understanding of the crypto products they invest in, especially those with hidden risks.
- Scams and Hacks: The report highlights that the previous cycle saw a loss of $7.7 billion due to scams and hacks.
- Tax Issues: Many investors face tax problems due to a lack of understanding of tax implications related to crypto transactions.
Security Levels
- Wallet Security: The report provides a guide to assess one’s wallet security level, ranging from Level 0 (least secure) to Level 3 (most secure).
- Account Security: The report also provides a guide to assess one’s account security level, emphasizing the importance of having multiple accounts secured by different seed phrases.
- Transaction Security: The report highlights the importance of checking every transaction and using advanced tools to preview/simulate the effect of blockchain transactions.
- Computer Security: The report emphasizes the importance of having a separate computer for crypto transactions and using custom security software.
- Phishing Education: The report underscores the importance of being aware of phishing scams and having a strategy to verify the identity of callers.
Diversification
- Importance of Diversification: The report highlights the importance of diversifying one’s crypto portfolio across different apps and Layer 2 solutions.
Actionable Insights
- Improve Understanding of Crypto Products: Investors should strive to improve their understanding of crypto products, especially those with hidden risks, to avoid potential losses.
- Enhance Security Measures: Investors should assess their security levels across different areas, including wallet security, account security, transaction security, and computer security, and take necessary measures to enhance them.
- Stay Vigilant Against Scams: Investors should stay vigilant against scams and hacks, and educate themselves about common phishing tactics.
- Understand Tax Implications: Investors should understand the tax implications related to crypto transactions to avoid potential tax issues.
- Diversify Crypto Portfolio: Investors should diversify their crypto portfolio across different apps and Layer 2 solutions to mitigate risks.
