Are you new to cryptocurrencies or are looking to invest in cryptocurrency? Here we shall talk about the risks associated with cryptocurrency trading and how to choose the best XMR wallet online.
First, you need to know that digital money (another term for cryptocurrency) gains its value from demand. The more investors there are, the higher the value. There are no intermediaries or middlemen when trading cryptos, as all transactions are private and secure. The value is driven by a defined set of algorithms and a universal ledger (known as blockchain). A blockchain is a string of blocks, all on different computers and almost impossible to trace.
There are currently hundreds of cryptos online, and more are being developed. They all have different features and values. Give,for example, monero, which boasts more privacy and security than the rest. Each exchange (or crypto) runs off a different platform and their unique coding makes them stand out.
Crypto trading is highly volatile; meaning it can be at its peak today and down to zero tomorrow. It is therefore advisable to only invest in money you can afford to lose. It is not a bed of roses- you can either make huge profits or lose it all. However, cryptocurrencies like XMR Monero have limited the supply of currency generated while factoring in inflation. This makes them safe for investment.
Digital money is decentralized. This means that there’s no Central Bank worldwide that can regulate trading. However, governments can prohibit crypto trading. Nevertheless, some banks are adopting crypto forms of payments, as well as several businesses.
The security of your crypto is entirely in your control as a trader. If you lose your private key, you have lost access to your funds. A private key can be stored on an external drive, written down on a paper or stored on the device you’re using to trade. Note that if you lose it, there is no way you can recover it.
Your account is also susceptible to hackers. The cryptocurrency you’re on can also be affected by source code bugs and in turn, this can reset your balance, wallet or your transactions. You should, therefore, do thorough research on the crypto you want to invest in for the safety of your funds.
Some developers have done a pump and dump scheme (a scam), leaving a lot of investors at a loss. Pump-and-dump is when the ICO (Initial Coin Offering) is floated in the market for investors, and once they put in their money, the developers close shop. ICOs are not regulated either and are thus riskier than IPOs. Most overzealous investors end up oversubscribing and in return are at a higher risk of losing their funds. ICOs call for careful and smart investing.
Conclusion
Investing in cryptocurrencies can be a two-way ride. It, therefore, requires you to enter the field with a clear mind, and realism. Consider all the possible outcomes and decide if you are ready to take up the risk. After all, you can only lose 1x of your money but can make up to 50x or more.
Happy investing!
