Is Crypto a Good And Safe Investment?

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Have you been wondering whether you should invest in cryptocurrency considering the risks involved?

Well, this blog will certainly help!

As more safe and secure crypto platforms adopt efficient security measures, more people have started investing in cryptocurrency. It also led several companies to accept bitcoin payments in both online and offline purchases!

So, if you wish to start trading in crypto and want to know more about its safety, read on as we discuss the various risks, new security measures, and other important aspects. Let’s get started!


Things To Consider Before Buying Cryptocurrency

Buying Cryptocurrency

The first thing you should be aware of while dealing with cryptocurrency is that it suffers from value fluctuations, just like the stock market. For example, in just the last few months, Bitcoin, one of the best-known cryptocurrencies in the world, fluctuated heavily between $30,000 – $60,000. The market risk remains quite similar for other altcoins as well.

So, if you are looking for a very stable and safe investment with guaranteed returns, cryptocurrency might not be a suitable investment for you. But, on the other hand, if you are more familiar with the concept of high-risk, high-return, cryptocurrency trading might be your go-to venture!

If you are willing to invest in cryptocurrency, we suggest keeping the investment to less than 10% of your overall portfolio. This will ensure that you won’t suffer extreme losses in the worst-case scenario, and with a good market, high will get a fair amount of profit.

Still willing to invest in cryptocurrency? Then read on as we explain its major risk factors.


Risk Factors

Like any other trading market, the primary risk factor is the risk of fraud, hacking, and embezzlement.

The cryptocurrency market has suffered its fair share of frauds in the last year – from October 2020 to March 2021 alone; there has been a loss of almost $1,900 per median.

Most of these frauds and hacking occur when hackers ask people for cryptocurrency and make false promises of increasing one’s holdings. There are other scams, too, like:

ICOs For Fake Cryptocurrency

An ICO refers to an initial offering of cryptocurrency to existing investors before it makes its way to the market. However, fraudsters have used this scheme to scam people by simply collecting funds in an ICO and making an exit from the market.

While most people have been able to identify the bogus ICO, newbies have usually fallen into their trap.

Crypto Pump And Dump Scheme

This scheme was also prevalent in stocks, and it has now made its way into the world of cryptocurrency. Under this scheme, a group of investors will invest a lot of money in one particular crypto inflating its price, thus convincing other private investors to invest. Now, those original investors will sell their crypto for a handsome profit, crashing the currency’s price again.

Now that we know the risk factors associated with this market, let us answer the golden question – is cryptocurrency safe to trade with?


Is Cryptocurrency Safe?

Is Cryptocurrency Safe

The answer to this question cannot be a simple yes or no – its safety depends a lot on how well you have analyzed the crypto before investing in it. If you see any cryptocurrency that seems too good to be true, do not invest in it – it is probably being pumped for false profits. Make sure you have done your homework before investing in the same.

However, blockchain is the underlying technology behind cryptocurrency and made trading in cryptocurrencies much safer. Unlike in stocks, your transactions in this blockchain technology are secured by hashing algorithms and hence are nearly impossible to alter without having access to the corresponding key.

There are also two-factor authentication processes being introduced by crypto exchange platforms. This allows the access of your crypto account to be entirely in your hands, thus increasing the safety of your currencies.

So, it is safe to say that cryptocurrency does come with its risk, but with the help of technologies like blockchain and a little caution on your part, you can safely trade with cryptocurrencies.

Let us share some tips on how to invest safely in cryptocurrency.


Tips To Invest Safely In Cryptocurrency

  • Make a thorough research on exchanges before entering the crypto market. Check background statistics and data to make sure the cryptocurrency you invest in is performing well.
  • Safely store your cryptocurrency in hot or cold wallets to save it from hacking. You can even convert them and buy gift cards since most online and offline retail stores now accept payments in cryptocurrency.
  • Invest in a sound investment strategy and diversify your investment to get good returns.
  • Be ready for ups and downs in the crypto market. If your portfolio is solid and stable, only then should you invest in the volatile crypto market.

Conclusion

Cryptocurrency does have its risks, but thanks to new emerging technologies like blockchain, it is becoming much more secure. So choose a reliable crypto exchange platform and start trading today!

One’s transactions are now safely stored, and you can also use devices like cold wallets to keep your currencies safe.

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