Cryptocurrency risks - how not to lose

Cryptocurrency risks - how not to lose

May 29, 2019

We have already written about why you need to be take care of your mental health and not to allow cryptomarket financial operations to affect you in a negative manner. Today we will talk about the risks of cryptocurrency. Forewarned is forearmed.

Recently, there has been a huge number of cryptocurrency investment proposals emerging. Some invest in Bitcoin or Ether, others prefer to invest in less-known cryptocurrencies. Surely, you've heard inspirational stories about how someone grew rich in a matter of months, bought a villa, a yacht, and drives a luxurious Bentley now. There really are many such stories, and they are quite true. Moreover, these lucky people (luck is the reason for all that) completely ignore the fact that they could have lost their last hundred dollars rather than gain millions.
Of course, such titans of the cryptocurrency world as the Winkloss brothers, Vitalik Buterin or Chris Larsen analyze all possible risks, know the market well, understand the trends and are familiar with the inside info. However, even they are not guaranteed 100% success in all financial transactions. What can we say about those who are making the first steps?
Cryptocurrencies are the future, and you definitely need to invest in them. But you need to invest soberly, consciously, after weighing all the pros and cons, and having carefully studied a startup or a company that is issuing the tokens. There is a balance in everything, even in the unstable cryptocurrency world. It is important to be fully aware that today you can lose, and tomorrow you can win. But in order to win more often than lose, you need to remember the risks.

- No one will protect you, except you
The activities of companies and individuals in distribution of cryptocurrency are not regulated by the state. If you invest money in a startup you like, and it goes bankrupt, neither the police nor the prosecutor's office will be able to help you. Be extremely careful, study everything possible about the company, read articles, forums, and keep asking questions. If a company has nothing to hide, they will happily answer your questions and satisfy your curiosity.

- No obligations
Even if today your cryptocurrency is worth something, there are no guarantees that it will remain on this level a day or a month from now. Cryptocurrencies are not backed with real assets, which means that if they are devalued, no one will not reimburse you. However, if you decide to sell your asset, let’s say, for a dollar, and tomorrow it will cost $100, the responsibility for this decision will also rest with you.

- Scammers
Not a single sphere of life is insured against them, but they are particularly numerous in the cryptoworld. There is a huge number of startups, ICOs, new tokens and cryptocurrency, but not everyone is honest. In addition to the fact that some projects may fail for reasons independent of their creators, that is, without malicious intent, there are still those who deliberately collect money from easy victims. It’s worth reiterating the first point: protect yourself, study the situation, keep your eyes and ears open.

- It’s not money
That’s true. Despite the wide distribution, popularity and use in different areas of life, cryptocurrency is not money. Cryptocurrencies are not a financial tool and can not be considered that, moreover, they have no value as currency. In other words, the symbolic ruble in your pocket may rise in price or depreciate against the conventional US dollar, but the fluctuations will be relatively insignificant and will not occur instantaneously. In the case of cryptocurrency, anything can happen - there are no guarantees.
Summing up, let’s remark that cryptocurrency volatility and the instability of this market are not only risks, but also great opportunities. The 35th President of the United States, John F. Kennedy, said, "The word “crisis,” written in Chinese, contains two characters: one means “danger,” the other – “advantageous opportunity.” Nowadays, this aphorism is quite applicable to the world of cryptocurrencies.

Avoid the dangers, use the opportunities!