In this blog post, we’re going to address if cryptocurrency is safe or not.
Both as an investment train and in terms of security.
Cryptocurrency is a type of digital currency that’s not backed by any government and allows for anonymous transactions.
It’s important for investors to understand the risks associated with investing in cryptocurrencies before they invest their money into them.
We’ll go over:
- Is Cryptocurrency a safe investment?
- What are Cryptocurrencies and their benefits
- How does it work?
- Risks associated with Cryptocurrency
- Tips for investing and coins to invest in now
And as well as whether or not it’s worth trading your time and money in this market.
Let’s go!
Is Cryptocurrency a Safe Investment? How safe?
The safety of a cryptocurrency investment is dependent on the type of coin.
There are many cryptocurrencies that are not safe for investors and stakeholders to purchase. Such coins have all been labeled as scams by both internet users and organizations such as The Wall Street Journal’s Market Watch.
To avoid purchasing these unsafe coins it is important to research the technology behind each currency before making any investments into them.
The safest way to invest in cryptocurrencies is through an established company or exchanges like Coinbase and Binance (signup for both) which has its own exchange system built-in so you can trade your fiat currencies for digital assets easily without putting yourself at risk from fraudsters trying to steal your money online.
This means that there’s no one right answer to the question if Cryptocurrency is safe or not.
In terms of using Crypto as a longterm investment:
It really depends because the fluctuation of cryptocurrency prices makes it difficult to predict the future of this currency.
But in terms of using cryptocurrencies as a medium for quick transactions and storage:
It seems like Crypto is safe enough, but with no government backing, you’re really putting your faith into Blockchain’s mathematical algorithms to protect information about who owns what.
Is Cryptocurrency a safe vault?
From my experience Cryptocurrency is safe for anyone to use, the anonymity and cryptography security makes it hard for someone to steal your money.
The only real way of getting scammed is through a phishing site that looks like an official website and you give them the Crypto key to your wallet.
What is Cryptocurrency and What are The Benefits?
Cryptocurrency is a digital currency that is designed to work as a medium of exchange.
It uses cryptography to secure and verify transactions, which means the coins are stored in blocks on a blockchain ledger.
The Blockchain is a public ledger that records every transaction ever made in the currency.
Each time an address is used, it generates a new code or key which cannot be guessed from old codes and keys.
The benefits of Cryptocurrency includes:
#1. Cryptocurrency is decentralized
Cryptocurrency is decentralized which means that there are not any third parties involved in the transactions. You can verify this by checking the transaction history on a public ledger called blockchain.
Your transactions cannot be interfered with by any third party because of this.
In a decentralized market, people can trade with each other without the need for a centralized system.
#2. Saves the human race from inflation
Cryptocurrency It saves you from inflation, and the government can’t devalue or revalue your money without your permission.
Which is one HUGE benefit.
Inflation usually occurs because the government increases the money supply.
By printing more money.
In the cryptocurrency space, this can’t happen without your permission and knowledge.
Cryptocurrency saves people from inflation by limiting how much currency is in circulation at once.
It does this through a limit on coins that are available for trade or purchase within a certain time frame (called an “ICO”). This prevents rapid changes to prices of goods and services.
This also protects against what’s called “Supply Shock” – when too many new currencies enter into circulation too quickly, which causes sudden deflationary shockwaves throughout the economy due to lack of demand for these currencies relative to their availability.
#3. Anonymity
Besides being completely transparent and trackable…
Cryptocurrency trading and investing is completely anonymous, so there are no worries about other people knowing your finances.
You also get to keep anonymity as there is less of a need for personal information when using cryptocurrency.
You can hold your crypto address without revealing anything about your identity in that address. Which is awesome!
#4. No International fees
Unlike money transfer services, such as Western Union or MoneyGram etc, there are no international transaction fees.
Cryptocurrency helps eliminate financial borders and barriers.
A person can send money to an individual in another country, without the need for a third-party company acting as mediator or go through the process of converting currency first, which usually incurs high transaction fees;
This is because cryptocurrencies are borderless.
Cryptocurrency doesn’t have any international transaction fees when it comes to transfers from one account holder’s wallet to another simply by using their unique address code (i.e Wallet ID).
This means that you don’t need to find out what your trading partner’s bank needs before performing the transfer, as well as there being no commission on exchange rates with cryptocurrency transactions since they’re traded globally based on market prices instead of determined by banks.
#5. Strong Security
Cryptocurrency is by far more secure than ordinary electronic transactions.
Let me explain:
The security of Cryptos is ensured by the usage of cryptography.
A cryptocurrency wallet is a kind of software that stores your secret keys which are needed to authorize transactions and can be used to send, receive or store currency.
The wallets make use of these two types of cryptographic algorithms:
asymmetric-key cryptography (in relation with public/private key encryption), and hashing function for message authentication code generation.
Asymmetric-key cryptography uses different, but mathematically related keys – one private and one public -to encrypt data in such a way that only the person holding the matching pair can decrypt it.
Whereas hashing functions generate short digital signatures from longer pieces of text called messages -which allows verification against any tampering during transit without requiring access to an original copy.
Being secured by cryptography makes it nearly impossible to counterfeit or double-spend. Unlike Fiat money.
How Does Cryptocurrency Work?
The idea behind Cryptocurrency is simple.
It enables the user to send and receive money on a peer-to-peer basis, without an institution being involved in any way.
Cryptocurrency works by means of encryption which secures transactions between two parties (e.g., buyer and seller).
These encrypted transactions are then stored publicly as blocks in a public blockchain that can be used for verification at any time.
The process is decentralized since there’s no central authority or server – all transactions must be approved through consensus among users before they’re confirmed and considered valid within the system.
Blockchain technology makes it possible for for transactions to happen without any interference from a third party.
This means that no matter who you are, how much money you have or where your bank is located, it’s possible to send and receive cryptocurrency with anyone anywhere in the world on equal terms.
The potential impact of this technology can’t be overstated enough.
The rising and falling of Cryptos are determined by demand and availability:
This means that the prices for cryptocurrencies can be volatile.
Meaning that if the demand for a cryptocurrency increases, then the price will usually rise.
And a ton of Hodlers are selling, the price falls.
If there is an event or situation which causes uncertainty about the supply of a given cryptocurrency, such as through government regulation and restriction on trading, announcements – these may also trigger people to buy more or dump the coins.
Which in any case affects the prices of Cryptos.
Is Cryptocurrency Safe to Trade?
As a beginner who went from investing a few hundred to becoming someone who has made tens of thousands of dollars trading Cryptocurrencies in a few months – I can tell you with my full chest that Cryptocurrency is safe to trade if you understand the market and know what you’re doing.
Cryptocurrency has been around for decades, but it is only just now that the world is really starting to take notice.
Bitcoin was initially thought of as a novelty item and its value was very low at first.
As time passed by though, people began seeing potential in this new currency form and more companies started accepting them as payment methods.
The worth of these currencies have increased exponentially since then which makes them an attractive investment opportunity for those with the knowledge to trade their way into success.
This rise in popularity also brings about other questions related to legality and safety when trading cryptocurrency online because the value of the currency is so volatile.
However, the fun thing is that its volatility makes it an interesting investment opportunity.
Is Cryptocurrency Safe from Inflation?
Cryptocurrency is a decentralized currency that is not controlled by any government or entity, so it cannot be inflated; Bitcoin has been around for over ten years with no instances of hyperinflation.
Cryptocurrencies like Bitcoin is an inflation hedge that has no other assets tied to it and its value is entirely based on other people buying it.
What are the risks of investing in cryptocurrency?
As there are lots of benefits – likewise the risks of investing in cryptocurrency are numerous, and the only way to stay safe is through caution.
Let’s run through some of the serious ones:
#1. Subject to hacking and theft
Trading may be subject to hacking or theft by individuals who want your money, but these can happen with any type of trading.
Advanced encryption methods protect against this eventuality, but it’s still important to take precautions like encrypting passwords.
#2. Volatility
The cryptocurrency market is very volatile.
But like most other markets it’s cyclical. If you’re confident in the long term prospects of a particular currency and are willing to wait out the ups and downs then this isn’t an issue.
However if you want quick returns on your investment – or need them for some reason – cryptocurrencies may not be ideal as this just can’t happen with any consistency.
#3. Strict regulations
The regulations governing cryptocurrency vary greatly from country to country.
So you should research how each one affects trading before making any decisions about what currencies to buy into.
This will help ensure that when they’re listed on exchanges (which might take time) there are no legal problems getting access to sell them later as well as ensuring taxes aren’t a problem.
#4. Pumps and dumps
If you’re considering buying some of the newer cryptocurrencies – it’s important to do your research and avoid getting caught up in any crypto “pump and dump” schemes where people buy into a new currency that might not actually have much use yet then sell when prices are higher than they were before making an investment.
That way if it does turn out to be something useful later on you’ll still have an opportunity to gain from those investments rather than just losing money by being taken in with hype.
What are the Tips for Investing in Cryptocurrency?
If you’re thinking about getting into the crypto market, there are a few things to know before making an investment.
While some may see it as an easy way to make money quickly, others warn that cryptocurrencies can be dangerous and volatile investments.
There are many factors that go into deciding whether or not investing in cryptocurrency is right for you; here are just a few:
#1. Be AWARE!
What crypto are you interested in?
You should be aware of the currencies that your investment is tied to, as well as what they’re used for.
Let’s say you want to buy a certain currency because it has low fees and high transaction speeds – if the company using this currency goes out of business or decides not to use blockchain anymore (a digital ledger technology underlying cryptocurrencies), then your money will likely go with it.
#2. Invest in what you can afford to lose
Do you have spare cash laying around that you can afford to lose?
It might sound strange, but many people invest their entire life savings into cryptocurrency without knowing how risky it may be.
Be sure to set aside funds for other items before making an irreversible decision like investing all your money into cryptocurrency.
#3. Always DYOR (do your own research)
Always do your own research on any crypto to see if it has a long-term potential.
Taking out time to research before you buy a cryptocurrency will help to avoid getting tricked by scam artists and falling victim to crypto pump-and-dump schemes.
#4. Again be AWARE!!
Know what you’re investing in!
It might seem like a good idea to invest in all of the top coins, but that strategy is really risky if one or more of those coins takes a major downturn and goes out of style with investors.
When deciding on which cryptocurrencies you want to buy, make sure they have long term longevity potential – an online resource like CoinMarketCap can help show how volatile some cryptocurrency prices are at any given time.
As well as provide information about where it ranks among other virtual currency options.
#5. Be careful when clicking links
Be aware that your crypto holdings may not be safe from hackers who try to steal them through scams like phishing emails and malware downloads.
So, always think twice before clicking on links sent by unknown sources.
#6. Don’t keep your cryptos on exchanges
I hear you asking: “Where should I store my cryptos then?”
Crypto wallets my friend!
Although many people buy cryptocurrencies through exchanges that hold their funds, there’s always the risk that hackers might try to break into those accounts.
You can still invest in digital currencies by downloading a software wallet instead where you control all private keys yourself; but this also means they must be kept safely and not on the computer connected to the internet.
#7. Don’t buy or trade on FOMO
Don’t fall victim to the fear of missing out and buy more than you can afford when prices are rising – wait until your holdings have reached their peak value before selling them off.
#8. Diversify
If you want to capitalize on this market while avoiding some of the dangerous risks, diversify by purchasing coins across various different types instead of just buying into one or two specific currencies with all your money.
Examples of Cryptocurrencies That You Can Invest in?
Here are long term Cryptocurrencies (with great potential) to invest in:
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple(XRP)
- Litecoin (LTC)
- Polkadot (DOT)
- Cardano (ADA)
- Binance Coin (BNB)
- Stellar (XLM)
- Tron (TRX)
All of these cryptocurrencies are well known and have been around for a number of years.
They’ve had time to establish themselves in the market and become popular with investors, so they are likely to be more stable than newer currencies.
In addition, all these currencies can be exchanged into other crypto coins on websites such as Binance which is an online exchange that allows you to trade fiat currency for cryptocurrency.
It should also be noted that there is no much risk in investing your money in any of these currencies because each one comes with its own blockchain technology and no one has the power to tamper with your coins.
Is Cryptocurrency it Worth Your Time and Money?
If you are thinking about investing in cryptocurrency it is important to know what you’re getting yourself into.
The idea of a digital currency that can be used without dealing with the hassle of banks may sound intriguing, but before making any investment decisions look at some potential drawbacks:
Since cryptocurrencies like Bitcoin operate independently from governments or central banks they lack accountability.
This means that if something goes wrong there won’t be an easy way for people who were affected by the problem to get help or compensation.
The same technology behind these currencies promises anonymity, which can lead to crime as criminals find new ways of transferring funds undetected.
Cryptocurrency do sound like a complex investment so make sure you do not invest more than you can afford to lose.
Blockchain is where the world may be headed, but we’re not there yet.
So, in my opinion, it is definitely worth (a bit of my) time and money.
I prefer catching onto trends when they’re tender and young and hope something good comes out of it. In years to come.
But I’d stay careful as well and NOT put all my eggs into one basket.
Final Thoughts
In short: there are pros and cons on both sides of the argument whether Cryptocurrency is safe or not.
Investing in cryptocurrency is risky but potentially very lucrative investment option for people who have enough capital and knowledge available.
However, there’s no guaranteed strategy for success so be careful about what type of coin you invest in as well as how much money.
Finally do some research before investing any money.
