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Risk Warning - Notice to UK Users  

Estimated reading time: 2 mins

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1.You could lose all the money you invest

The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in crypto assets.

The crypto asset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.

2.You should not expect to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker here.

The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS protection here.

3.You may not be able to sell your investment when you want to

There is no guarantee that investments in crypto assets can be easily sold at any given time. The ability to sell a crypto asset depends on various factors, including the supply and demand in the market at that time.

Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your crypto assets at the time you want.

4.Cryptoasset investments can be complex

Investments in crypto assets can be complex, making it difficult to understand the risks associated with the investment.

You should do your own research before investing. If something sounds too good to be true, itprobably is.

5.Don’t put all your eggs in one basket

Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.

A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about cryptoassets, visit the FCA’s website here.

What is a private key for crypto?

Private Keys Decoded: Discover the vital role of private keys, their significance in safeguarding your cryptocurrencies, and how to keep them secure.

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Public and private keys are integral to the use of cryptocurrencies. They not only allow people to send and receive cryptocurrencies but also to maintain the security and ownership of the funds. Private and public keys are generated when one creates a digital wallet.

What is a private key?

Every cryptocurrency wallet consists of a public key and a private key. Anyone can deposit cryptocurrency into a public address (public key), but no one except the owner of the corresponding private key can remove funds from that same account.

A private key, also known as a secret key, is a random string of numbers and/or letters used to protect one's cryptocurrency wallet and receive crypto transactions, similar to a pin code for a bank account. Private keys prove ownership of one's wallet address, protect it from unauthorized access and theft, and are used to sign transactions on the blockchain. 

Private keys are used in conjunction with an algorithm to encrypt or decrypt data. The holder of the private key should be the only one who knows it, as this secrecy is what gives the private key its power. The golden rule is to keep your private key safe.

Private key vs public key

Public and private keys are mathematically linked to each other and relevant to only one blockchain wallet. A public key can be compared to your traditional bank account while the private key is akin to the pin code to access this account. 

Users would share the public key with anyone looking to transfer funds to their crypto wallet, however, under no circumstances should your unique private key ever be shared with anyone. It is also strongly recommended that one stores their private key offline in a safe space, and not on a desktop or accessible location (in the event of a hack).

When one loses their private key, whether lost or maliciously taken, they will lose access to their crypto funds. Due to the decentralized nature of cryptocurrencies, there is no support line or central authority that can access that information.

This is where exchange wallets come in handy as the account is created using an identity that once verified can gain access to the funds. This is known as a custodial wallet where the platform holds the private keys for you and allows you to access the funds through a user-generated password. When it comes to storing private keys, this is the most convenient option, however, if you use an untrustworthy platform that increases your risks greatly. It is strongly recommended to enable two-factor authentication when using this option.

How do private keys work?

A public key is generated using complicated mathematics by your private key, ensuring they form a matched pair. These digital keys are created when one creates their crypto wallet on a particular blockchain. 

After being generated, a private key must be stored in a secure location, ideally offline. Furthermore, private keys can have an extra layer of security by being password-protected, encrypted or hashed, ideally all three.

The owner of the public key will use the private key to encrypt the digital signature when making a transaction. 

A transaction is encrypted using a public key and can only be decrypted by using the matching private key. Therefore, when someone sends a transaction they will need their private key to decrypt and prove they own the funds being used in this transaction. 

The private key is used to sign the transaction, which verifies that the transaction hasn't been modified. A digital signature is created when someone combines their private key with the data that's being sent as part of a transaction. 

Once the transaction has been executed the nodes on the network will check and authenticate the details of the transaction and if any information is incorrect the transaction will be rejected. Once executed transactions cannot be reversed. 

Where should you store your private key?

Your private keys are essentially your passwords, so it's of utmost importance that you keep them safe.  Your best bet is to store them offline somewhere safe. This might mean written on a piece of paper, stored on an offline device, or kept in a password manager.  As mentioned above, public keys can be stored anywhere and shared with anyone.

To avoid the hassle and stress of ensuring the safety of your private keys at all times, you can use a hot wallet supplied through a reputable exchange. If you choose to take this route ensure that the crypto platform is regulated and adheres to stringent security measures. The Tap app ticks these regulatory boxes and ensures that customers have full access to their funds at all times, without the risk of losing them if they lose their private keys. 

In conclusion

Private keys are digital passwords used to establish one's ownership in a crypto wallet and are created in conjunction with the public key of the same wallet. One should never share their private keys with anyone. 


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.


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