Investment in Crypto currencies- Be Alert
There is a lot of talks going on regarding the crypto
currencies. It is true that you can make a lot of money in a short period of
time. Moreover, the processing fees of the most popular crypto currency,
Bitcoin is also minimal. There are so many opportunities that crypto currencies
allow you to make money. Are you tempted to invest money in crypto currencies?
Crypto currency returns are excellent
The performance on the crypto currencies is absolutely
stunning. The question is whether you should invest in it spending your life
saving or take a loan.
With all the hype going round with the crypto
currencies, you must understand that there is every possibility that the whole
crypto currency investment can backfire you and make you penniless.
Crypto currencies are volatile
The volatile nature of crypto currencies can totally ruin you
or even reduce your returns on the investments you have made. Hence, if you are
aware of what you are investing in.
When you lack the knowledge of the crypto
currency type, and the pros and cons of investing in it, you can fall in the
trap of the crypto currency hype.
You cannot become rich overnight
You have to very well understand that
investing in crypto currencies is not a scheme of making you rich easily.
It
generally needs about one or two years in order to make considerable rewards in
Bitcoin investing.
Using all your savings or taking a loan can be quite a risky
thing, especially when you absolutely don't have the knowledge of the different
crypto currency technologies and coins.
Be informed of the investment you are making
It is necessary to be informed, and arm yourself with the
knowledge of the entire thing before jumping into a decision. This can
definitely help in the significant reduction of the risks associated with the
crypto currency investment.
Furthermore, you have to identify the crypto
currencies that are backed by the solid fundamentals.
You must ask questions to yourself before investing:
- Does the crypto currency you are investing have any issues?
- What is the value of return you will receive?
- Are there any other similar competitors? If so, you must study and compare their valuations.
Often, there are red flags associated with the crypto currencies.
The above mentioned points can be helpful in analyzing why shouldn’t invest in
the crypto currency that you choose to.
There are no fixed returns on crypto currencies
You must get used to fact that there is no such concept of
making fixed returns while you invest in the crypto currencies.
Various scams
and Ponzi schemes in association with the crypto currencies have become very
dominant in the market.
It is advised that you shouldn’t fall prey to such
frauds and scams and be careful enough to prevent such unwanted circumstances.
Prediction of the long term benefits in Crypto are not easy
Crypto currencies are highly volatile in nature and
speculating the assets are quite challenging. It is more or less similar to
gambling where you should invest only that you have the potential to lose. You
will be exposed to tons of crypto currencies in the current market.
You will be
attracted to invest in them. But, may be, ten years down the line, such crypto
won’t have their existence.
Hence, it is very difficult to make any prediction regarding
the long term potential and benefits of the crypto currencies that you are
currently investing in.
Hacking and other scams are associated with crypto currencies
As technology is getting advanced, we are getting more
dependent on the cyberspace and becoming victims of hacking, phishing and
online frauds. Cyber scams have become bigger and greater today and you are
always under the threat of getting robbed online.
Common forms of online cryptocurrency fraud
Cyber crimes can be committed
only on the internet and are created because of the presence of WWW or the
World Wide Web. There are different types of such crimes that are delivered by
the criminals. The most common forms include:
- E-mail phishing
- Hacking the personal information or details of the users
- ID decoding
- Virus imitation, and,
- Other types of cyber vandalism.
In fact, there are some crimes
that are not known to the people and thereby people fall into the trap. Do you
know it is the evolution of the internet and its diverse usage across the world
that makes the sources of cyber crimes?
You need to be careful and extra cautious while online
According to the reports of
several reliable sources, the majority of offenders belong to the 18-30 years
age group. You can protect or shield yourself from such situations by being
careful, cautious and wise.
Think wisely before you are giving out any personal
information and watch out for suspicious e-mails.
Further, run anti-virus and
anti spyware software applications in your cyber system and always try to use
unique passwords that no one can crack.
Also, for online gambling reliable sites need to be chosen else there is huge risk of loss.
The digital or the crypto
currencies have witnessed a hell lot of troubles with cyber space criminals and
hackers over the years of their existence.
There are some easy targets,
especially those involved in largest Bitcoin and other crypto currency
transactions. Have you attained lots of Bitcoins over years? If your answer is
a ‘yes’, you must seek additional precaution and safety in your interest.
Using a hardware or paper wallet as means of safety
The safety against the cyber
hackers lies with the cold storage via a hardware or a paper wallet. But,
unfortunately, according to the recent studies of the University of Edinburgh,
the security measure has been identified with a number of security loopholes.
Hence, crypto currency always possesses the risks of scams and frauds as
compared to other investments.
You can easily misplace your crypto currencies
Cryptocurrency operates in a very
complex and mysterious algorithm that many are not aware of it. In fact, it is
quite difficult to understand out where are you storing your hard earned money.
A case of UK resident, Mr. James Howells claimed to possess tens of millions of
Bitcoin dollars. He stored on a hard drive, but he accidentally misplaced it
and it became a trash.
Investing in stocks requires you to have licensed custodians
When you invest money in stocks, there
a custodian, who holds the stocks combining the physical as well as digital
records and also verifies the transactions.
The fund managers are bound to use
the licensed custodians, which in return helps to limit the risks involved with
the loss and theft. Moreover, you also get an option to buy stocks from
companies directly.
There are no licensed custodians in crypto currencies
Such
is not the case with the crypto currencies, as there are no licensed
custodians involved, who assures the quality of the crypto currency
transactions taking place. This is one of the primary problems faced by the
digital currencies.
Sadly, there isn’t any technology available as of yet in
respect to it. There are several queries arising about ownership records of
crypto currency:
- What is the software functionality?
- Who has the exclusive ownership?
- The validated existence of the digital currencies
- The impact of hacking and threats on the guardianship of your assets.
Crypto currencies are not at all easy and simple to transact with or trade
Bitcoin, as a digital or virtual currency has gained immense
popularity across the globe. But, the irony is that it has been robbed of one
of the most vital functions, that, it is making the payments digitally. Stripe,
a digital payment processor has ended its absolute support for Bitcoin.
Hence,
it won’t be wrong to mention that Bitcoin and other crypto currencies have
become less functional or beneficial for the payments.
The crypto currencies are not liquid assets. Hence, they are
not capable to be included in the licensed funds.
A certain percentage of money
needs to be kept in the assets so that it can be sold without delay, in case,
you, as an investor desire to get some cash back instantly.
Investing
in crypto ETF can be a risky venture
The ETF structure is not compatible
with the way the crypto currencies trade in the current market. This match is
known as an arbitrage in the economic domain.
The arbitrage can prove to be
disadvantageous to you, as an investor, especially when you don’t have the
updated information about the market conditions. Investments can also be made in online startups which are suitable for cryptocurrencies.
Instances
of arbitrage in digital currencies more common
In the recent times, it has been a major concern for the
regulators that the crypto currencies are more prone to the arbitrage. This
because of the relatively low volume of the digital currencies and the extreme
price swings that are experienced.
For instance, last year, the price of the
Bitcoin was found to swing around 30% and even more in a day for six times.
Crypto currencies have been shut down
There is another problem that has been faced by the digital
currencies. It is already seen that the most profit making Bitcoin transactions
and exchanges have been shut down suddenly without any signs of warnings.
According to the reports, more than $1 billion crypto exchange value has been
shut down last year. In December, 2017, the currency exchange has to shut down
two times in a span of seven days.
The issue needs to be addressed with a practical solution.
There needs to be a mechanism that can report with the unpredictability of the
crypto currencies and other such instances.
An answer has to be identified in
respect to the effect on the market price with the crypto currency exchange
shut down.
There is no exemption from paying the fees
The real concept of creating Bitcoin
was primarily to come up with an alternative to the high transaction fees of
the banks.
People started Bitcoin trading with the idea that they don’t have to
experience the high fees associated with the banks and thereby save money. But
the reality is quite different from the notion or the idea.
A percentage of the total transaction amount is charged
When you
are trading crypto currencies, you will have to bear the cost of the services?
How much will the process cost you? Well, you will be charged with a fraction
of the percentage of the total transaction amount.
The fraction obviously
depends on the exchange. Hence, it is a myth that crypt currency trading
doesn’t require any processing fees or it is easily affordable.
Avoid crypto currency exchanges via the currency wallet
You will be happy to know that you have options to avoid the
complete exchange process. It will be conducted with crypto currency wallet,
allowing you to buy as well as sell Bitcoins.
The crypto currency wallet is an
app that you need to download on your smart phone. The fee structure is
different. It depends on the total number of participants buying and selling
the Bitcoins worldwide. The fees are higher when there are more individuals
involved in the crypto currency trading.
But, in December, 2017, when there was a higher
number of people involved with the trading, the transaction fees increased to $55
every transaction.
Conclusion
The bottom line is that investing and trading in crypto
currency have the potential for making huge revenue in a short period of time.
You will find a lot advice on the same, and the dominant press coverage makes
it even more accepted around the world. The speedy growth had led to the
volatile nature of the crypto currencies.
There are several crypto currency
fraud and cryptocurrency scams coming up too. Moreover, you need to have the
knowledge to understand the crypto currency market well.
Since the crypto currency trading is new in the market, it
has some stability issues and is risky as well. You must be aware of the risks,
weigh them in contrast to the rewards you will get, and accordingly make the
right choice.
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