There are many of you who have been writing in to discuss cryptocurrency and whether or not this is something which you should be getting involved with. This is understandable of course given the huge amount of attention which this market has been getting over recent. Nobody can deny the fact that this could be a great place for you to make some solid profits. Financial experts like Robert Testagrossa however, have been rightly vocal over the past few weeks, about the potential dangers of this kind of investment, and these are some warnings to heed before you part with your money.
Even though cryptocurrency is definitely in the middle of a bull run right now, you have to understand just how volatile this market is. There are a number of reasons for this volatility, firstly there is still a lot of doubt about the market, secondly there are big whales who can pump and dump prices when they like and thirdly there are low level investors who panic quickly. You have to make sure that you are aware of just how quickly prices can rise and fall.
No Sale, No Profit
For as long as you hold the money in your crypto wallet, those profits mean absolutely nothing. This is something that many have failed to grasp over the last few months. The only time in fact that your gains become actually profit is the moment that you hit the sell button. It is of course encouraging to see these gains, but as long as you still have them in crypto, they mean very little.
One of the great appeals of cryptocurrency is that it is completely decentralized. This means that your holdings are not attached to a bank or a financial institution. As positive as this can be on the one hand, on the other it means that you lose a layer of security which you would usually be able to count on with banks and licensed financial institutions. And so when it comes to sending money between wallets, you have to be incredibly careful. Most wallets have a long address of 16 -24 digits. If you send money from one address to another, and you get a digit wrong, that money goes to another address and there is absolutely nothing you can do about it. Always ensure that when sending, you have the address written perfectly.
Alt coins can really give you a great chance to make some huge gains, because they generally rise by much larger percentages than the coins with big market cap like Bitcoin and Ethereum. Whilst there are some great projects out there, you will also find a lot of trash coins. Those who create the coins then use bots to promote the coin on the likes of Twitter, and that causes big buying a rising price. Those who have set the coin up then sell, the price dumps, and people lose out. Always ensure that you have done great research on the coin before you buy.
This is a great place for investors, just keep an eye out for the warnings.