Cryptocurrencies have become a leading digital asset that people are choosing to invest in.
But is cryptocurrency safe?
This is a legitimate question that most people ask. Given the recent spike in crypto trading, governments struggle to be consistent in cryptocurrency regulations.
Cryptocurrency comes with certain security risks that you should analyze before making your first trade. Firstly, crypto is extremely volatile which means that your returns can fluctuate within seconds. Secondly, cryptocurrency is a relatively new and unregulated currency that scammers can manipulate.
But crypto comes with multiple security benefits too that appeal to people.
So, let us find out how you can safely trade cryptocurrency.
What is Cryptocurrency?
A cryptocurrency is a digital form of currency that appeared on the global stage in the year 2009 with the introduction of Bitcoin (BTC).
Bitcoin is the first-generation cryptocurrency that you can buy. Crypto has come a long way over the past decade and today, there are over 18,000 cryptocurrencies that you can choose to buy.
Crypto is a digital asset that exists online and has no physical presence. The transactions of cryptocurrency are recorded on a public distributed ledger called a blockchain.
Cryptocurrency is a decentralized currency which means that it operates free from the influence of a bank or government. In addition to this, cryptocurrency is secured by cryptography that minimizes the chances of fraud.
Carl Runefelt, alias, The Moon, is a global crypto leader who believes in the mass adoption of cryptocurrency.
He says, “I would say Bitcoin is the best form of money that humans have ever seen before. It is the scarcest asset in the universe. It is the only asset that has a finite supply where the supply can never be diluted, and this can only take place in the digital world that is why we have never seen it before.”
Cryptocurrency Risks to Consider Before You Invest
When you are investing in an asset, the golden rule is to consider all the risks involved.
Here are some of the risks you should consider before buying crypto.
Cryptocurrency is Volatile
The one word that is often associated with crypto is “volatility.”
A cryptocurrency is a new form of currency, and its value can rise and fall within hours.
So, you should avoid investing in crypto based on market hype. Examining the current trends of crypto will help you make sound investments.
Risks of Fraud
Unfortunately, the global financial market including cryptocurrency is awash with frauds.
Scammers can use fake crypto wallets, apps, and emails to lure you into giving them access to your private keys. Once you lose your private key, your whole investment may be gone.
So, it is recommended that you should never share your crypto wallet key with anyone to avoid fraud.
Cryptocurrency is Largely Unregulated
Despite the increasing gains of crypto around the world, cryptocurrency is largely unregulated.
You cannot enjoy the security that a bank or government ensures when you buy a regulated asset. If a crypto exchange that holds your crypto assets goes bankrupt, you can lose all your capital.
In addition, you cannot reverse a crypto transaction once it is done. If you send money to the wrong person, there is no way of getting it back.
How Can You Safely Trade Cryptocurrency?
Crypto is not all about risks.
You just need to be vigilant and make a sound crypto investment strategy to make a lot of money with cryptocurrency.
Carl Runefelt emphasizes, “To make huge profits from investing in cryptocurrencies, one must carry rigorous market study and notice the factors which affect a particular cryptocurrency.”
Here are some tips you should follow.
When you are investing in crypto, the one thing you should remember is that you can lose money instantly.
You should invest in a cryptocurrency up to that you can easily afford to lose. Even if the value of crypto is falling, it should not scare you.
Diversity is Key
A cautious approach to crypto investment is diversifying your crypto portfolio.
This means that you should never invest all your money in a single cryptocurrency.
Carl on his YouTube channel, The Moon, says, “Sell coins when they hit the top value and purchase another coin, take your profits, and buy other coins as cryptocurrencies are highly volatile. This applies to everything whether it is Bitcoin or any other coin.”
There are thousands of cryptocurrencies circulating in the market that provides a diverse option for investment.
Research Secures Your Investment
When you are looking to enter the crypto market, you should do research about cryptocurrencies.
The best way to do this is by reading trade charts of a cryptocurrency that you want to buy. This will help you avoid making emotional decisions and you can base your investments on market facts.
Another important thing is to find a safe crypto exchange platform that offers a secured crypto wallet to keep your money out of the reach of scammers.
A good understanding of crypto will help you make sound investments.
Cryptocurrency is relatively a new phenomenon and there is still a lot to learn about crypto trade, NFTs, crypto wallets, and blockchain technology.
You can follow the above-mentioned tips to start investing in crypto in a hassle-free manner.