What SoFi experts are seeing leads them to believe that the risk of cryptocurrencies isn’t quite what people expect. Losing money just because you acquired crypto, for example, is unlikely. However, making mistakes trading coins in a volatile market results from your error. So there are basic things you should know to maintain your safety. For example, the safety trends for crypto this year revolve around your competency. Unfortunately, none of this has to be dangerous.
What is Cryptocurrency?
Cryptocurrencies aren’t currencies in the way that society accepts fiat currencies. As its name implies, crypto is the result of an encrypted algorithm made to be a means of accounting primarily. The precision in bitcoin’s accounting makes it popular today. Due to this, the misconceptions around crypto’s safety stem from the market they first arrived in. Bitcoin is the example that many use, for it’s often seen as what fuels the growing dark web.
Is Investing in Cryptocurrency Safe?
Investors take reliable steps to keep them safe as they invest in cryptocurrency. You’ll find that a learning curve does exist as you become competent in this industry. For starters, you need to understand what blockchain is. Yes, there are safety concerns, but the bulk of these are answered by the same tech people fear: blockchain. So the first proof of safety behind crypto is the blockchain code that operates it.
Scammers
Though not entirely the fault of the person scammed, scammers are a leading factor behind the insecurities of investing in crypto. For example, you might have encountered such scams through initial coin offerings (ICOs). These schemes promise you can gain tremendous wealth by buying something that doesn’t even exist. Unfortunately, many investors in this scheme find that the coin or blockchain was never there. It’s such methods that you have to be extremely careful of.
Personal Accounting
In crypto, individuals have to account for their own money. There are no banks or insurers who cover the losses you endure. This is why storing your crypto in cold wallets is best when you’re not using them. Instead, a hot wallet is what investors connect to the web. These wallets are what get hacked when people carelessly expose themselves online.
Poor Trading Strategies
Trading crypto is just like trading stocks or international currencies. A straightforward error can wipe out someone’s entire account and, based on the statistics, is what happens often. Over 90 percent of market participants lose their money. A lack of strategy is usually why. You’ll likely pay a high price due to greed, fear, or ignorance when you enter the market. On the other hand, crypto markets are highly volatile, so market conditions change quickly without explicit notice.
Everyone in the crypto market can protect their wealth by being competent and detail-oriented. Your money is in your hands, so you dictate your safety.
