Investing in Cryptocurrency: Risk or Opportunity
Tuesday May. 3rd, 2022
Every new or potential crypto investor wants to know if investing is a risk or an opportunity; it is a burning question. You’re right to be wary of cryptocurrency investment; we’d be worried if you weren’t. However, you should know that what you face with investing in crypto depends on you. Therefore, if you will buy XRP, you want to ensure you know the risks involved and how to manage or outrightly avoid them. You also want to know the right patterns to consider, predictions to follow, and the best time to buy.
What Cryptocurrency Investing Entails: Facts and Stats
Cryptocurrency is still a mystery to many, and with the many biased notions flying around, education is vital for new investors. Here are five fun facts and stats about cryptocurrency investing to give you an idea of the concept:
• Ethereum and Bitcoin are not the only digital coins available; more than 11,000 virtual coins are in circulation. While some of them are popular, others are still trying to gain ground. Interestingly, there is a possibility of more digital currencies coming into the cryptocurrency market this year.
• Cryptocurrency is not unlimited; like gold and oil, there is a limit to how much crypto can be mined. That means the availability of Bitcoin and altcoins will come to an end someday. This is most important, especially because of the many environmental challenges of Bitcoin mining.
• Satoshi Nakamoto is not the name of Bitcoin’s founder; no one knows who created the crypto market. That name has always been a pseudonym for the person who created Bitcoin.
• Regardless of bans in countries, they cannot physically ban cryptocurrency. Anyone can own a digital wallet with XRP in it – even those in countries where cryptocurrency is prohibited.
• Cryptocurrency is prohibited in China, yet, ironically, the country controls the largest percentage of the mining network.
Risks in Cryptocurrency Investment and How to Avoid Them
Cryptocurrency investment is not for the weak-minded or people with low shock tolerance. If you want to invest in cryptocurrency, you need an efficient shock absorber. Here are some risks involved in crypto investing and how to avoid or, at least, manage them.
• Digital coins are extremely volatile; their prices go up and drop violently and without warning. Sometimes, Bitcoin price can drop tens of thousands of dollars; it did in 2021, leaving investors in debt for a while. This is not your fault; therefore, the only thing you can do is prepare your mind to do crypto investing long-term. The best thing is to lock your digital wallet and throw away the keys – in a place you can retrieve them, of course.
• Virtual currencies are unregulated by the central bank, government, or legal services. Nevertheless, that’s gradually changing as governmental and financial institutions get interested. To be safe, you want to keep your information secure, trade safely, and avoid crypto deals that appear too good to be true.
• Cryptocurrency operates on secure technology, but it is traded on exchange platforms prone to cyber-attacks and frauds. You will want to research the exchange before signing up and trading with them.
Making the Most of Your Crypto Assets
Despite the risks involved in crypto investments, they also offer ground-breaking opportunities. Here are ways to make the most of your digital assets and wisely use the network for your good.
• Lend your digital assets. You can participate in a lending/borrowing program as a lender; this is where you loan your assets and get paid with interest. The most important factor here is that you’re lending your digital assets to a trusted third-party or doing so on a reputable platform.
• Buy the dip. You can make the most of cryptocurrency price drops by purchasing more assets. After a while, the prices on those assets will go back up, and you’ll get more than you paid for.
• Trade. You can buy or sell cryptocurrency taking advantage of its volatility; that is, buy when you suspect a rise and sell when you suspect a fall.
• Airdrops. In airdrops, you get free cryptocurrency; however, this has the highest risks. Most crypto developers offer free digital coins when they need support for a new coin; you’ll want to be careful. Don’t just jump on any initial coin offering you see; try to do your due diligence.
• Earn Dividends. This doesn’t have the biggest profit, but it provides a steady way to earn with your digital assets.
In conclusion, cryptocurrency investment has risks, no doubt. However, you can maneuver those risks to work in your favor if you invest with your eyes open. Cryptocurrency investment risks can turn into opportunities, depending on how you invest.