Cryptocurrency is moving into the mainstream as more and more people are investing in it.
And one of the most common questions people often ask – is cryptocurrency safe?
Cryptocurrency has come a long way since it was launched.
It has shown the potential of changing the financial system and shifting people from using fiat to digital currency.
Let us focus on what an average person should know about how safe cryptocurrency is.
What is Cryptocurrency?
Cryptocurrency can be referred to as any one of thousands of digital currencies that you can buy.
The most popular of these currencies include Bitcoin (BTC) and Ethereum (ETH).
Cryptocurrency is a peer-to-peer payment system that does not rely on banks to process a transaction or on a central government to create a currency.
You can use cryptocurrency as a medium of exchange, but it is primarily an investment.
Unlike fiat or traditional currency, there is no physical existence of cryptocurrency.
Another big difference between fiat and crypto is that cryptocurrency works in a decentralized way, free from the influence of banks or the government.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
According to Carl, “If you’re really feeling worried, get your money into Bitcoin because Bitcoin is the safest asset out there.”
In addition, cryptocurrency is borderless which means that you can go anywhere with your money stored online in your account.
Risks Associated with Cryptocurrency
One of the most common words which are often related to cryptocurrency is “volatility.”
Since cryptocurrency is a decentralized currency, its value can change at any time.
But you can avoid crypto volatility by building a diversified crypto portfolio and buying cryptocurrency for the long term.
In addition, the following are the risks of cryptocurrency that you should be aware of.
- Cryptocurrency is secured by a private key and if you lose it, you cannot get it back.
- Cryptocurrencies are subject to intense market hype and buzz, which can lead you to a bad investment.
- Another risk of cryptocurrency is decentralization, and it might be possible that you are unable to trade cryptocurrency in your country.
- As a crypto owner, you might be targeted by phishing attacks that can result in a huge loss.
- Cryptocurrency is relatively a new currency as compared to fiat and has a limited history.
Is it Safe to Invest in Cryptocurrency?
Cryptocurrency has withstood the test of time and is getting more popular every day.
Bitcoin has emerged as the world’s largest cryptocurrency by market capitalization, thanks to its profitability and positive adoption.
But how safe is cryptocurrency?
Cryptocurrency is secured by cryptography which is a technology to secure, encrypt, and protect your information in computer systems.
The transactions of cryptocurrency are stored online on a public distributed ledger called blockchain technology. This technology is based on complex codes which are hard to break. The transactions of cryptocurrency are stored online on a public distributed ledger called blockchain technology. This technology is based on complex codes which are hard to break.
Thousands of public ledgers work to verify against each other which comprehensively reduces the risk of fraud.
But cryptocurrency is volatile which means that its value can fluctuate at any time.
To reduce the volatility of cryptocurrency, you should first understand cryptocurrency comprehensively and then invest in it wisely.
Carl on his YouTube channel, The Moon, says, “The price of bitcoin keeps changing every second, and for new investors, it is necessary to understand the reason behind these changes. Examining its history or the factors that influence the rise and fall of bitcoin, everything must be studied.”
How to Safely Invest in Cryptocurrency?
You might have met people making millions of dollars with cryptocurrency.
This has happened because they have invested in cryptocurrency after doing rigorous market research.
Here are some important tips that you can follow when buying cryptocurrency.
- Avoid just buying a single cryptocurrency and prefer making a diverse investment.
- Have a trusted cryptocurrency wallet to store your private keys.
- You should not make your investment in a cryptocurrency based on the market hype and always read the current trade charts.
- Crypto experts recommend crypto investors stick to popular coins like Bitcoin and Ethereum.
- You should avoid opening suspicious direct messages and email to mitigate the risk of phishing attacks.
- Always invest in a cryptocurrency which you can easily afford to lose.
In addition, you should buy cryptocurrency through a reputable crypto exchange platform like Binance, Coinbase, and more.
Conclusion
A crypto investor needs to know that no investment can be guaranteed, and cryptocurrency comes with its own set of unique risks.
But cryptocurrency investment can be extremely beneficial if you follow the above-mentioned best practices.
Ultimately, it is up to you to decide whether to invest in cryptocurrency after making a sound strategy or not.