You have probably noticed that digital assets and DeFi crypto have become extremely popular lately. We have seen an increase in the number of people willing to trade digital tokens and coins, and the future of cryptocurrencies is certainly exciting. In this article, we’ll explain how DeFi works, what you need to know as a beginner, and how to protect your digital assets from cybercriminals. But let’s start with the basics.
Introducing DeFi crypto
DeFi crypto is a term that describes the cryptocurrencies used for trading goods and services on the internet. DeFi is short for decentralized finance and is a broad term that encompasses a range of financial services hosted on public blockchains. Bitcoin, Ethereum, and Litecoin are all examples of DeFi crypto.
The most important aspect of the DeFi industry is that it is completely decentralized. It is also censorship-free and peer-to-peer, meaning no paperwork and no third parties to be involved in facilitating transactions. Decentralized finance has the potential to revolutionize financial markets and make transactions fairer, more accessible and easier to complete for people and businesses around the world.
How do you trade DeFi crypto?
People who own digital assets are usually involved in crypto trading. There are several ways to trade crypto, but the easiest is to sign up for a cryptocurrency exchange, where you can buy and sell specific coins. Essentially, a crypto exchange works just like an online brokerage platform, and it allows you to trade digital currencies of your choice. There are many apps for novice crypto traders, and Coinbase for example make it very easy for you to enter the crypto market for the first time.
Another option is to trade crypto through derivative financial instruments, with Contracts for difference (CFDs) are a good example of this. CFDs allow you to speculate on the price movement of cryptocurrencies and are an approach that many experienced crypto traders have been using lately. Platforms like Plus500 allow you to invest in CFDs, although there are other choices as well.
Is DeFi crypto trading safe?
Trading cryptocurrencies is risky, as with any investment. Therefore, your investment can go up or down, and there are some cryptocurrencies that are considered particularly risky investments. Before investing in crypto, you should realize that the markets are volatile.
There is also an increase in cryptocurrency-related crimes. Since 2016, crimes related to crypto have increased by 312% per year and include a wide range of incidents such as coin theft and sophisticated crypto trading scams.
Therefore, when you decide to trade crypto, you need to improve your online security. A good idea is to keep your coins in a cold wallet, an offline device that is not connected to the internet. Also consider insuring your digital assets, which is super important if you have a significant amount invested in crypto.
A simple and reliable insurer for everyone involved in Web3 is Amulet. Their DeFi insurance provides a safety net for Web3 users and reduces many of the risks associated with crypto investments and other digital assets. If you haven’t already, consider insuring your belongings with Amulet insurance today.