Tron, like all other cryptocurrencies and traditional investments, isn’t immune to risks. But as the governments and regulatory agencies start raising concern over increased crypto crimes, now everyone wants to know if indeed Tron is a safe investment.
Launched in 2017, Tron has made it to the top 30 cryptocurrencies with a current market capitalization of $6 Billion. It has an overall ROI of 3,144.87%+, and its daily trading volumes have been ranging between $1 and $2 billion for the past 30 days. These numbers endear it to both the short-term TRX token traders and long-term investors looking to make a quick buck or diversify their portfolios.
This popularity, however, has also drawn in cybercriminals and scammers who are actively preying on Tron traders/investor funds. Given the high regularity and massive scale of crypto attacks being perpetuated daily, crypto experts are finding it hard to keep a record of lost crypto assets, especially since most are either under-reported or never reported.
Given Tron’s popularity among investors and listing with virtually all exchanges, which make it easy to offload stolen tokens, crypto analysts believe that it has placed a target on Tron investor wallets and trading accounts.
But what are the actual threats to Tron investing?
We will be answering this question in this post by looking at all the common threats to Tron investing and sharing practical tips on how to avoid them. We will also help you understand the difference between Tron security and privacy. Before these, though, we need to highlight some factors that everyone must consider before buying Tron tokens.
What To Consider Before Buying Tron (TRX)
First, you also need to understand that you play the biggest role when it comes to securing your Tron investments.
Understand that the security of your digital assets is greatly influenced by all the choices you make before and during the token purchase process. That the first steps to guaranteeing the safety of your crypto investment start with your choice of a digital wallet, choice of the wallet and exchange account passwords, crypto trading platform, staking and lending platform, as well as the choice of your trading strategy.
Secondly, you need to understand that the cash you invest in Tron is not safe from volatility. That, like all other cryptocurrencies, Tron prices are influenced not just by their adoption and developments within their specific blockchain networks. They are also highly correlated to Bitcoin prices, and if Bitcoin crashes, so will Tron and the larger crypto market.
Finance experts and crypto analysts like Steve Hawkins, the CEO for Horizons ETFs, have already described Bitcoin as being “more volatile than volatility itself.” And to illustrate how its volatility trickles down to affect Tron’s price action, we look at both their price performance for the past 12 months.
Bitcoin hit its all-time high of $64,000 on 14th April, Tron rose to $0.16 on 15th April 2021 for the first time in 3 years. On 25th April, BTC price slipped and shed off 25% of this all-time high. Tron followed suit by losing more than 34% of its value. Within a week of China banning BTC in mid-May, BTC and TRX token prices shed a further 46% and 54% of their April peak prices, respectively.
This illustration shows you that the price action of other coins and that of the crypto market have a direct impact on Tron’s volatility. Take this into consideration and learn how to monitor the overall crypto market before buying Tron tokens.
Read Also: Pros and Cons of Investing in Tron
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
What Are The Risks Of Buying Tron (TRX)?
At the moment, the two primary risks to a Tron investment are the volatile and unpredictable token prices action as well as the threat of loss of your TRX tokens to hackers.
The price volatility risk is the most common but also the least disastrous of the two. It involves the loss of value for your Tron investments owing to a sudden drop in price for Tron tokens. We say it is the least hurtful because this loss is impermanent, implying it can be corrected with time when the price of TRX tokens rises again. This says that you do not necessarily lose money when the price of Tron or another cryptocurrency falls. You only lose money if you sell the tokens after such a drastic price drop.
On the other hand, the loss of crypto investment to hackers and scammers is permanent. Regulatory agencies around the world have even raised alarm over the rising cases of crypto hacking and investment scams.
If the crime reports by The Federal Trade Commission (FTC) are anything to go by, for instance, 2021 may prove to be the most disastrous year yet, in the history of crypto trading. According to FTC data sampled by the Motley Fool, Americans reported 9927 cases of investment scams that resulted in the direct loss of more than $215 Million in the first quarter of 2021 (more than was lost in a similar manner in 2017 and 2018 combined).
A majority of these, including a case that the U.S Attorney General’s office is prosecuting on behalf of a California resident who lost more than $11.5 Million to a Coinbase support representative impersonator, are cryptocurrency-related. There is also a reason to believe that Tron investors and traders have been targeted by these scammers and hackers due to the token’s popularity and broad acceptability.
Others Scams to Look Out For
Fake website scams
When hackers cannot break into your digital wallet and exchange accounts, they create fake websites that mirror the front end of your favourite exchange or wallet. They then lure unsuspecting you into keying your wallet and exchange login details into these fake exchanges and wallets. After capturing these sensitive details, they use them to defraud you of the crypto assets held in the exchange or wallet.
Crypto Pump and Dump schemes
Pump and dump schemes are as old as the investment industry and are all too common in the stock markets as they are popular in the crypto markets. Here, they take different forms, but they are all aimed at inflating the price of a crypto asset. The most common include unsolicited ‘Expert opinions’ about a potential price breakout of a cryptocurrency.
These ‘experts’ will bombard social networks with claims that a digital asset like Tron is “headed to the moon” and “headed for a price breakout.” But the truth is far from reality, and these are looking to create an artificial price rally that could help them dump their token holdings at a mark-up. If they don’t own TRX tokens already, they could be looking to profit from shorting the coin’s downtrend when the artificial rally peaks and TRX prices start plummeting.
You can tell an expert opinion from a pump and dump claim because the latter doesn’t always provide fool-proof analysis to back their often bold claims about a token’s current or future price action.
Check Out: Will TRON Make Me Rich In 10 Years?
How To Keep Your Tron (TRX) Safe
One of the most effective strategies for guaranteeing the safety of your Tron tokens is by storing them in an offline wallet. Where possible, invest in a reliable hardware wallet and avoid keeping your coins in an exchange as there have been multiple documented cases of these platforms being compromised and the digitals assets deposited therein stolen.
In November 2019, for instance, a South Korea-based exchange - Upbit - was compromised, and 342,000 ETH tokens (worth $991.8 Million today) were stolen from an alleged cold wallet.
Remember that by storing your crypto assets in a personalised, offline vault, you are not only guarding against losses to hackers. You are also guarding against any eventualities that may compromise access to your digital assets, as exemplified by the Canadian exchange QuadrigaCX on 4th February 2019.
In this case, the exchange clients lost access to their crypto assets worth over $190 Million at the time after the exchange CEO died before sharing the password for the platform’s cold wallets.
We also recommend activating multi-factor security features for both your crypto wallet and exchange accounts. Importantly, keep off all get rich quick schemes and keep tabs with the crypto industry news to learn of emerging crypto crimes/scams and how to avoid them.
Read Also: How To Make (Or Lose) Money With Tron (TRX)
Tron (TRX) Security Vs Privacy
There is no limit to the measures that you can take in guaranteeing the safety of your digital assets. And before you can explore these safety measures, you need to understand that there is a world of difference between Tron security and Tron privacy.
A crypto security discussion, like this post, revolves around maintaining the integrity of your digital assets. It, therefore, centres around the threats and risks to Tron investments and how you can either avoid them or minimize the possibility of loss if they ever hit. In this article, for instance, we have mentioned that hackers, scammers, and price volatility pose the biggest threat to your Tron investment and looked at a few steps you may take to keep your digital assets secure.
A crypto privacy discussion, on the other hand, would relate to keeping your personal data safe when investing in Tron. In such a case, we would be exploring the anonymity levels provided by the Tron blockchain network as well as the crypto exchanges and wallets handling your trading and personal data.
So are your Tron transactions private? Well, a brief analysis of the Tron network development reveals that the network borrows heavily from the Ethereum blockchain code that doesn’t guarantee privacy to traders. Director of data and indexes at CoinDesk, Galen Moore, says that when trading on such a network “you’re really not anonymous, more like pseudonymous” because even though Tron doesn’t tie your crypto transactions to your SSN number, it leaves a digital footprint, a hash code, that is traceable to you.
Further, virtually all reliable crypto exchanges and wallets that support TRON tokens require users to verify their identity. This then makes it possible for a governmental agency to compel the exchange or wallet to reveal the identity of one of their clients.
Tron investing is, therefore, not for you if you are looking for absolute anonymity when trading and investing in crypto.
Bottom Line: So, Is Tron Safe To Invest In?
Yes, Tron has the backing of the highly reputable and ultra-safe Tron blockchain, whose delegated proof of stale consensus mechanism makes it nearly impossible for hackers to breach the platform. Further, crypto exchanges currently provide you with more than enough security features to keep your digital assets safe. There have also emerged numerous individuals and organisations dedicated to educating crypto investors/traders on emerging crypto scams and practical measures on how to keep their digital assets safe.
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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
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