The price of cryptocurrencies are always fluctuating causing investors to be weary about spending money on new coins. The most well known cryptocurrency, Bitcoin, has been in the spotlight recently for a rapid increase in price and then sudden decrease. At its peak, Bitcoin reached a high price of nearly $20,000 USD. Then plummeted to $13,000 USD not long after. Since peaking, Bitcoin price has been fluctuating since and shows no sign of stabilisation.
Most investors who have been successful in cryptocurrency have invested in ICOs, such as Etherum. These ICOs get sold to investors and have no actual value. This means that when the coin goes public, it can hold no monetary value. Causing investors to lose their money. Although, there are still benefits to investing in cryptocurrency, such as fast profit and quick money.
The Risks To Cryptocurrency
Not Holding The Cryptocurrency On A Secure Platform
These days storing a cryptocurrency isn’t the bewildering task it once was, with more secure platforms popping up on a monthly basis. As you can expect, with the price of some coins reaching over $10,000USD the scams are also increasing.. in complexity and the risks are bigger than ever for investors. The usual scams are in the form of fake wallets and cryptographic key phising. There are also fake cryptocurrencies which lure people to invest with hopes of getting rich overnight.
The best policy with cryptocurrency security is that “if it’s too good to be true, it probably just that”. Unlike banking at your local atm, cryptocurrencies are decentralised. Which often creates the perception of being secure and anonymous. Hacking a coin platform is no easy task, so for scammers getting one coin at a time is the perfect method. The simple scams are often more effective than the large-scale ones. Because the holders of the coin do not expect their coin to be taken.
Last year a large-scale scam came about where the coins were being transferred from mining rigs into the scammers wallet because the default credentials were not changed. Trojan’s such as CryptoShuffler are responsible for thousands of dollars being taken due to crypto-keys being hacked.
Although, for people who own cryptocurrency there is hope! Not everyone is trying to take your coins and with these methods, not many people will be able to.
How To Keep The Cryptocurrency Safe
When storing cryptocurrency, the best way to keep it safe is to have a physical copy of it. Cryptocurrencies can be put in a hardware wallet, this is like a USB drive. Allowing for crypto keys to be stored locally on a hard drive. This is also known as being ‘offline’. Once offline, it is much harder for your keys/coins to be hacked and redistributed. Crypto experts warn people that storing vast amounts of coins online are susceptible to being hacked. This can result in thousands of dollars worth of coins being taken. Meaning that digital wallets are not always the optimal places to store your keys.
Ledger Nano S and Trezor are two of the best hardware wallets and only cost $100. They are easy to setup and provide great security. To set up these hardware units you need to choose a pin and a ‘seed’, A seed is similar to a password hint, incase you forget your pin. It is advised that you keep multiple copies of your pin and seed incase you forget your pin. On the unlucky chance you do forget the pin, your cryptocurrencies will be locked in the hardware and unusable.
Some people even go to the extent of storing their pin and seed in a fireproof safe incase of any disasters.
The Benefits Of Investing In Cryptocurrency
For most people investing in cryptocurrency is a way to profit a good amount of money in a short time. Bitcoin is the frontrunner for that statement and has caused hundreds of thousands of people to get involved. Although, there are more benefits to investing in cryptocurrency than getting rich overnight.
Cryptocurrencies are portable, carrying large amounts of money is no easy task. Carrying around massive amounts of cash is risky for more than one reason, making crypto very enticing. The fact that you can carry around millions of dollars worth of Bitcoin (or any coin) on a hard drive is very handy for some people.
Secondly, cryptocurrencies are decentralised and untraceable. So when you trade and exchange your cryptocurrency it cannot be returned to the buyer and is therefore untraceable.
Huge Profits – Small Losses
If you were lucky enough to invest a few years ago in some cryptocurrencies such as Litecoin and Bitcoin, then you have hit the jackpot. In 2012 the price of 1 Bitcoin was around $5USD with the price today at $14,500. This means that over the 5 years you would have earned $14,995 on each coin you bought.. while that doesn’t sound much, some people bought upwards of one hundred coins. Making them millionaires over and over.
This is great while the coin is cheap, because you are only losing a small amount of money if the coin collapses. But because the market and price for cryptocurrencies are so uncertain you can lose it all and if you buy a coin when it’s more expensive the stakes are much greater.
This being said, some experts estimate the price of Bitcoin will reach in excess of $40,000USD. So there is still plenty of profit to be made even if you didn’t but the coin at $5USD.
Check out how to predict cryptocurrency charts and capitalise on technical analysis.