You can secure your crypto portfolio from known threats like hackers. You can also anticipate upcoming threats like a market crash or a bankrupt exchange.
However, it would be a nightmare to anticipate black swan events like the Silicon Valley Bank collapse, which was initiated by action by US authorities.
Here are nine proven methods to help you secure your crypto portfolio from unknown and black swan events like the Silicon Valley Bank collapse.
1. Diversify Your Portfolio
Portfolio diversification is essential to keep yourself insulated or at least safe from black-swan events. In May 2022, the collapse of Terra LUNA was totally unexpected. People lost almost $64 Billion, many even selling their entire portfolios.
Further, with the collapse of UST, other stablecoins like USDT were also sold in massive numbers.
A diversified portfolio spreads risk across multiple assets and helps limit the loss caused by a single cryptocurrency or NFT.
2. Keep a Tab on Authorities’ Action
There were several authorities’ actions in the past in the technology sector, with many of them focussing on businesses related to cryptocurrencies and blockchain.
The largest example is the lawsuit against Ripple Labs, the issuer of XRP cryptocurrency.
Though it might seem difficult to track authorities, however, you can get ample hints from their trends of investigations and commentaries made by top officials.
For example, in the US, following the comments made by the Federal Reserve Chairman or the Finance Secretary.
Voice of Crypto tracks and publishes all the necessary information to keep you well-updated with the world of crypto.
3. Use a Hardware Wallet
Hardware wallets were a boon when the liquidity shortage affected several cryptocurrency exchanges and service providers. Major crypto exchanges were also affected.
Further, several exchanges like FTX engaged in the personal usage of depositors’ funds in illegal ways.
Using a hardware wallet ensures that you remain in control of your portfolio and only access crypto exchanges when required.
Software wallets are also secure, but they interact with many Dapps and websites that can compromise their security.
4. Keep Your Wallets Active
Keeping the wallets active is necessary to help you remember passwords and secure the mnemonics associated with wallet recovery. Several people have lost access to their crypto funds.
5. Be Aware of Scams and Attacks
Scams are getting impressively advanced with their tactics. Even large institutions are not secure from scams. In February 2022, the crypto exchange platform Wormhole lost $320 Million after a cyber attack.
Constantly updating your software, wallet interface, apps, and security patches for your device is the only way to keep safe against these threats.
6. Use a VPN
A VPN makes it difficult for a hacker to track your IP address as it is re-routed from other locations via a global network.
VPNs are frequently used by financial institutions and companies to mask their online activity from being unlawfully tracked.
7. Create a Portfolio for Risky Asset
You can insulate risks from risky assets harming your entire portfolio or wallet by creating a new wallet containing risky assets.
If a harmful cryptocurrency issuer tracks your wallet, you can be sure that your main portfolio is secure.
8. Use Reputable Exchanges
Many exchanges are built using APIs and not in-house built systems which exposes them to external risk.
Using a safe exchange helps you secure your transactions, card details, and a lot of other personal information.
9. Be Emotionally Prepared for Blackswan Events
Finally, black-swan events are unpredictable and are therefore called so. You must be emotionally prepared to limit the damage caused by a black-swan event.
You can move your funds, keep multiple portfolios, and ensure that your wallet provider, exchange, and decentralized exchanges are well-audited.
Being emotionally prepared helps you limit the effect of a single event and make mitigation efforts to ensure minimal damage.
Black-swan events are rare, but they can cause significant damage to your financial well-being. Being prepared limits the damage caused by these events and ensures that your financial security is not threatened.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.