Some considerations for risk management in decentralized wallet management

From the economic point of view in the world of cryptocurrencies there are two basic tips that will increase our chances of success, the first is to design a trading strategy that will help us to be more consistent when executing buy/sell operations, and the second tip is to diversify our portfolio, i.e. invest in more than one cryptocurrency.

Now, if having an effective trading strategy for trading cryptocurrencies and managing an investment portfolio are the two key elements that will help us add more capital to our wallet, it is also true that within the blockchain there are other recommendations of equal or greater importance that we mostly overlook.

Among the recommendations that we usually overlook is the management of strategies to avoid being victims of scams, remember that there are many malicious people out there who will take advantage of our technical inattentiveness to take our money.

Before continuing, I should mention that in the world of cryptocurrencies it is not easy to find legitimate recommendations, or rather to discover infallible strategies that help us to capitalize attractive sums of money, and at the same time to protect us from scams.

However, executing strategies that go beyond the basic notions we have of the blockchain will always keep us away from being victims of scams, now, at some point in our lives we have heard the phrase “never put your eggs in one basket” although the message has biblical connotations, it is a reference message in financial matters.

In the world of cyptocurrencies, the phrase in question not only invites us to diversify the investment in more than one cryptocurrency, but also to keep our cyptocurrencies in more than one wallet, since this action gives us the possibility to reduce the risk of economic losses, by dividing and transferring the balance in more than one of a platform that offers financial exchange services.

In the last few days, I have learned first hand of cases of scams of fellow members of our blockchain, who have been victims of scams in MetaMask by people who somehow gained access to their passwords, in these cases the saying “if the basket falls, all the eggs will break” applies, therefore, if instead, we place our cryptocurrencies in more than one wallet, the risk of losses decreases considerably.

Consequently, considering including the strategy of diversification of wallets that have varying levels of security greatly misleads fraudsters, as it somehow lowers the correlation of success for these unscrupulous people, since it makes it more difficult for them to access the multiple wallets we have available.

One thing to keep in mind is to manage between two to three centralized wallets, and two to three decentralized wallets, and in each one send balances in a balanced proportion.

The cover image was designed by the author: @lupafilotaxia, incorporating the background of the image: Fuente: Zabo