Cryptocurrency is a relatively new concept. Doing transactions using cryptocurrencies requires good knowledge. This area is growing rapidly and becoming very popular. At the same time, hackers started adopting newer methods to cause trouble and steal all the currencies. But it is possible to provide protection with digital currencies to avoid huge losses. This article deals with the part about cryptocurrencies, which talks about protecting them from malicious attacks. The liquidity pool locker concept is also discussed in detail below.
Cryptocurrency can be defined as digital tokens that can be secured by cryptography. We can think of it as a digital asset. Cryptocurrencies have seen a lot of backlash and controversy for a number of reasons. These reasons mainly include their use for illegal activities and their vulnerability to malicious attacks. At the same time, they are praised for various reasons, including their transparency, portability, etc. Bitcoin is the most popular form of cryptocurrency.
How to protect cryptocurrency?
As mentioned before, cryptocurrency is a new market. But that doesn’t make it any less vulnerable to hacking and theft. Therefore, it becomes very necessary to protect digital currencies. There have been various cases where people have been subjected to malicious attacks.
Such attacks lead to the loss of several cryptocurrencies. People who hack these accounts then usually disappear online and become impossible to trace. They also carry a bunch of digital currencies with them.
One of the best ways to protect digital currencies is to use a wallet. Originally, there were two types of wallets. New designs are also being introduced these days. Among all these options, a physical wallet has to be the best option. These are also called hardware wallets. They have a password, which needs to be known, to gain access to the tokens. There is also a major downside to these hardware wallets. If the user loses or forgets the password, they can never access the tokens in any other way.
Apart from these, there are also paper wallets, which are online wallets.
Users should always use strong passwords and should never share their secret keys.
Why should we use a liquidity compartment?
Cryptex is a type of liquidity locker. The liquidity pool locker allows the user to store their tokens under a smart contract. Under this contract, they cannot transfer tokens from the start date to the end date specified in the contract. There are various such cabinets, and some of them are highly valued. Due to such restrictions, currencies remain safe and sound and are not vulnerable to malicious attacks. The user can also customize the duration and then store the LP tokens. These lockers do not retrieve tokens, their function is to keep them safe for the specified period according to the smart contract.
Among all techniques, liquidity pool locking is very effective. It also carries no risks compared to cold wallets.
If an individual (developer) does not own the LP tokens, he cannot claim the fund’s return at any time.