If you are still new to the cryptocurrency world, chances are you are curious and a little overwhelmed. But should that worry you? No way – the journey to understanding cryptocurrency starts here. Below, we explain in a simple and easy-to-understand way what exactly makes cryptocurrencies so exciting. We’ve also told you some of the risks involved that you need to consider before going all in.
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No bank involvement: More transparency and control – but greater security risk
When cryptocurrencies first hit the market, one of the things that fascinated many was their independence from traditional banks. When you buy a cryptocurrency, you make the transaction without the involvement of any intermediary. This creates a much more transparent trading system where you don’t have to trust any third parties. However, this freedom also means there is little to no help to be found should you ever lose your cryptocurrency wallet. If you forget a banking service password, they can help you recover or reset it for you. But with cryptocurrencies, you are at the mercy of the extremely low number of hackers able to break into people’s “stranded” cryptocurrency wallets – with a very low success rate.
Volatility: Chance of big returns – but risk of big losses
Cryptocurrencies are famous for their high volatility. One day, a currency may be at its all-time low – and the next, it may well have skyrocketed to unprecedented heights. Of course, you can always assume, and buying when a currency has hit a low is what many would consider a rather safe bet. In reality, however, you never know. If you’re lucky or predicted correctly, you could get super rich super fast – or, if your hunch is wrong, you could lose a lot of money. Still want to enter the market? You can read more about cryptocurrencies here to stay up to date on coin values and do your homework on the nature of cryptocurrencies. Research has never harmed anyone and with cryptocurrency you will need all the help you can get.
The blockchain: safe from hackers – but is it scalable over the long term?
As we mentioned earlier, hacking into a cryptocurrency wallet is next to impossible – and the same goes for the rest of the infrastructure that supports cryptocurrency trading. Blockchain remembers entries forever. After making an entry, it is stored on multiple computers in a decentralized, ultra-secure system. This way, no hacker can access and damage the entire chain, making cryptocurrency trading an extremely safe endeavor in terms of cybersecurity.
An exciting new type of coin – one that requires a lot of research
Getting into cryptocurrencies as a complete beginner is no easy feat, and that’s not enough. The vast world of digital currencies is still very young, having only existed since the 2000s – unlike, for example, traditional stock exchanges, which have been around for hundreds of years. It is almost impossible to predict how cryptocurrencies will evolve in the future and whether they will have a place in this world in, say, 50 or even 25 years. Investing in cryptocurrency is already risky, so you will have to devote a lot of time and effort to reading about it to know what you are buying. But with that said, you’re definitely in for an interesting ride if you decide to invest.
