Cryptocurrency is comparatively a new concept. Sound knowledge is required to do transactions using crypto. This area is growing rapidly and is becoming very popular. Simultaneously, the hackers have started to adopt newer methods to cause distress and steal all the currencies. But it is possible to provide safeguards to the digital currencies to avoid massive losses. This article deals with that part about cryptocurrency, which talks about protecting them from malicious attacks. The concept of liquidity pool lockers is also discussed below in detail.
We can define cryptocurrency as digital tokens that can be secured through cryptography. We can consider it as a digital asset. Cryptocurrencies have experienced a lot of backlash and controversies for multiple reasons. These reasons mainly include their usage for illegal activities and their vulnerability to malicious attacks. At the same time, they also got praised for various reasons, including their transparency, portability, etc. Bitcoin is the most popular form of cryptocurrency.
How to Protect Cryptocurrency?
As had already been mentioned, cryptocurrency is a new market. But that does not make it any less vulnerable to instances of hacking and thefts. Hence, it becomes very necessary to safeguard digital currencies. There have been various instances where people got exposed to malicious attacks.
Such attacks lead to the loss of several cryptocurrencies. The people who hack these accounts then tend to vanish on the internet, and it becomes impossible to trace them. They also take loads of digital currencies along.
One of the best ways to protect digital currencies is to use a wallet. Originally there were two types of wallets. These days new designs are also getting introduced. Amongst all these options, the physical wallet has to be the best option. These are also called hardware wallets. They have a password, which one needs to know, to gain access to the tokens. There is also a big disadvantage of these hardware wallets. If the user loses or forgets the password, they can never access the tokens by any other method.
Apart from these, there are paper wallets too, which are online wallets.
Users should always use strong passwords, and they should never share their secrets keys.
Why should we use a Liquidity Pool Locker?
Cryptex is a type of liquidity pool locker. A liquidity pool locker allows a user to store their tokens under a smart contract. According to this contract, they cannot transfer the tokens from the starting date till the ending date mentioned in the contract. There are various such lockers present, and some of them are very reputed too. Due to such restrictions, the currencies stay safe and sound, and they are not vulnerable to malicious attacks. The user can also customize the duration and then store the LP tokens. These lockers do not take possession of the tokens, their function is to keep them safe for a mentioned period as per the smart contract.
Amongst all the techniques, liquidity pool locker is a very effective one. It also does not possess risks as compared to cold wallets.
If an individual (developer) does not have ownership of the LP tokens, they can’t claim the pool funds back at any point in time.