Advantages and risks of the digital currencies

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Advantages and risks of the digital currencies

If you’re still new to crypto, chances are you’re both curious and a little overwhelmed. But should that worry you? Not at all – the journey to understanding crypto starts here.

Below, we explain in a simple, easy-to-understand manner what exactly it is that makes cryptocurrencies so exciting. We also inform you of some of the risks involved that you need to take into consideration before diving in.

No bank involvement: More transparency and control – but bigger security risk

Back when cryptocurrencies first hit the market, one of the things that fascinated many were their independence from traditional banks.

When you buy a cryptocurrency, you make the transaction without the involvement of any intermediaries. This makes for a way more transparent trading system in which you don’t have to put your trust in a third party. However, this freedom also means that there’s little to no help to be found, should you get locked out of your crypto wallet.

If you forget your password to a bank service, they can help you recover or reset it for you. But with cryptocurrencies, you’re at the mercy of the extremely low number of hackers capable of breaking into people’s “stranded” crypto wallets for them – and even their successes are few and far between.

Volatility: Chance of big returns – but risk of big losses

Cryptocurrencies are infamous for their high volatility. One day, a currency can be at its all-time low – and the next, it could very well have skyrocketed to heights previously unheard of.

Of course, you can always make guesses, and buying when a currency has hit a low is what many would consider a somewhat safe bet. In reality, however, you just never know. If you’re lucky or predicted correctly, you can get super rich super fast – or, if your guess turns out to be wrong, you could lose a whole lot of money. 

Still want in on the market? You can read more about crypto here to stay updated on currency values and do your homework on the nature of crypto. Research never hurt anyone, and with crypto, you’ll need all the help you can get.

The blockchain: Secure from hackers – but is it scalable in the long run?

Like we previously mentioned, hacking your way into a crypto wallet is next to impossible – and the same goes for the rest of the infrastructure supporting cryptocurrency trading. 

The blockchain remembers entries forever. Once you make an entry, it’s stored on several computers in an ultra-secure, decentralized system. This way, no hacker can ever access and damage the entire chain, making crypto trading an extremely safe venture in terms of cybersecurity.

An exciting new type of currency – that takes a lot of research

Getting into crypto as a complete beginner is no mean feat, and that’s putting it lightly. The vast world of digital currencies is still very new, having only existed since the 2000s – as opposed to, for instance, traditional stock markets, which have been around for hundreds of years.

It’s next to impossible to predict how cryptocurrencies will evolve in the future and whether they’ll even have a place in this world in, say, 50 or even 25 years. Investing in crypto is already risky, so you’ll have to dedicate a lot of time and effort to reading up on it to know what you’re buying into.

But with that being said, you’re definitely in for an interesting ride if you do decide to invest.

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