Thinking About Cryptocurrency Investment? Is It Worth The Risk

Undoubtedly, one has to evaluate a few risks before a Cryptocurrency investment. No matter how small the investment is, there is a possibility that you might lose everything.

Cryptocurrency, on paper, seems like such a tempting affair in the financial world. However, in reality, it can put you under a lot of mental and financial stress when you cannot find your way in the quicksand of Cryptocurrency.

This is why risk management is such an important part of investing in these ventures. However, is accessing risk enough? Cryptocurrency investment is the epitome of investment, and we should invest in it.

What Is Cryptocurrency

The digital currency which commenced holding the hands of Satoshi Nakamoto was Bitcoin. Therefore, started the legacy of Cryptocurrency. At first, many thought of Bitcoin to be a hoax and didn’t pay much attention to it.

However, with time and the popularity of social media, many started talking about it. Now, it is one of the biggest currencies in the world, with big names like Snoop Dog, Aston Kutcher, and Elon Musk investing in different Cryptocurrencies.

The transaction is carried out through a digital ledger called the Blockchain. Blockchain is connected through computers, and every computer goes through the same alteration when one piece of information is altered.

This is a genius innovation for getting everyone in the decentralized ledger (which essentially Cryptocurrency is) and access. Plus, it is safe and free from any alteration since no information can be deleted or altered.

So, why do people worry so much about its risks when it is so safe?

What Are The Risks Involved In It

In order to mitigate the risk and become a pro Cryptocurrency investor, one has to at least understand the different risks. Therefore, here is an overall evaluation of all the risks which you can witness when working with Cryptocurrency.

1. High Volatility

There is still an ongoing debate about whether Cryptocurrency is a currency or a commodity. There is no other currency form with such differences between rates for every month. When we talk about price shifts, it is literally thousands of dollars almost every month. This is probably because it depends heavily on demand and supply chain.

For example, Bitcoin has a limited number of coins, so when the demand is high, it will be sold at high prices. Now, if you are a novice, navigating your way through the volatility could be difficult.

Many get anxious and invest in ventures they regret later. It is difficult to stand on standby and not invest. Simply observing the market even in high volatility. If you are a newcomer, this level of precision might take some time to come.

2. The FOMO & FUD

These are famous internet terms that have usage in the Cryptocurrency market. FOMO is called Fear Of Missing out. FUD, on the other, is Fear, Uncertainty, and Doubt. Both are poison when it comes to investing with a stoic mind.

Anyone who is trying to make a quick profit through Cryptocurrency might get tempted by the rise in price and immediately try new tricks. If luck favors them, it can lead to profit, or they might end up losing everything.

This is the ultimate pitfall of treating Cryptocurrency as a gambling route, not a long-term investment.

3. No Foolproof Investment

However, even when we speak about long-term investment, there is no guarantee that this long-term will pay off. We have already discussed before that Cryptocurrency is not technically a currency. When Bitcoin is called digital gold, and terms like volatility are thrown around, it becomes more of a commodity.

On top of that, no centralized body backs up its claim. As a result, Bitcoin’s founder is still unknown to everyone. Plus, there are governments among countries that have banned their usage and don’t even consider them as a commodity.

Therefore, one day Bitcoin might cease to exist, and all your investments so far could be null.

4. Security Risks For Novice Investors

If you are a novice with almost no knowledge about safety in the field and basing it all on the fact that Blockchain will protect you, then you are in for a surprise. Yes, Blockchain is impenetrable, but that doesn’t mean the cybercriminals have stopped their nefarious activities regarding Cryptocurrency.

Here are some of the common scams you may witness or be witness to if you are not careful.

• Infiltration of the wallet where you store your currencies. It is safer to use a hardware wallet.
• Cloning of devices to see the login id & password or to use that device for mining purposes.
• Phishing emails or false advertisements with a promise of doubling your Cryptocurrency if you store your Cryptocurrencies with a certain ‘enterprise.’

5. The Landscape Is Changing

Bitcoin is not the only Cryptocurrency in the market. You have meme coins, altcoins, and even NFTs. So, there is one thing to be sure. Crypcorirrecny, or the whole matter of digital currency, is a dynamic matter.

It is always changing, and if you do not possess the spontaneity to change or at least comprehend it, you will fall behind. On the other hand, you have to adapt to change quickly, so long-sightedness and future planning through predictions are two skills you will need.

How To Mitigate These Risk

So, here are some of the expert’s suggested ways in which you could mitigate the risk of being too confused about Cryptocurrency.

• Have a risk management plan. Always be one step ahead with your calculation; if this is your first-time investor, only invest the amount you are winning to lose
• Do not store your Cryptocurrency in online wallets; try to store them offline or on hard drives. Have safe browsing and internet practices to prevent cloning and stolen IP addresses.
• Have a multifactor authentication when logging in to your Cryptocurrency account.
• When you have emailed about doubling your Cryptocurrency or any platform that promises the same run! These entities are just the middle ground for you to buy and sell Bitcoin. An authentic one will not offer these favors. Open your first account with ethereum code.

To Wrap It Up!

To wrap it up, there will always be a risk in investments like this, but you have to ensure your strong game in the Cryptocurrency world. So, as a whole, here are some ventures where Cryptocurrency could be an advantage.

Business ventures will get easier, and you will even have niche superiority. This is because you are already offering something different than your competitors.

You could travel better if you find ventures which accept Cryptocurrencies. Then, there is less trouble converting currencies.

You can prevent credit card scams, popularly known as refund scams, done by some customers.

With the right guidance, you can persist.