More recently, cryptocurrency was still completely unknown, very few people knew about it. No one could have thought of such interesting prospects for earning money on it until recently. Although cryptocurrency is not in the best situation right now, its capitalization and market size are sufficient to arouse investor interest. Cryptocurrency trading has a high level of capital loss risks. But, accordingly to the well-known and reliable sources, the level of profitability is equally high.

Cryptocurrency can be safely considered one of the most profitable assets in the last decade. Like other assets, cryptocurrency has several disadvantages that entail serious risks for investors and traders. Further we will dwell on them in more detailed way.

Disadvantages of cryptocurrecncy trading

Cryptocurrency investing and trading risks

There is no legislative base that could regulate the activities of cryptocurrency market entities. Naturally, fraudsters will gladly take advantage and extract theirs from those who will not remain vigilant. In addition to scammers, you can’t so easily return your money in cryptocurrency so simply if the product or service you purchased does not match the description.

1. Cryptocurrency exchanges like to close from time to time. As a result, you are left not only without your profit, but also without capital if it is in active circulation with you.

2. A bunch of malicious software that will help you lose your cryptocurrency savings and earnings.

3. The risk of being caught by law enforcement in countries where cryptocurrency and transactions with it are illegal.

4. There is a very high risk of losing your investments and profits associated with large jumps in the cryptocurrency rate.

5. Cryptocurrency is not a real asset or money. Its price is not tied to anything. Its growth and decline is directly related to the interest in it from potential users.

Many types of cryptocurrencies can carry a different purpose. The final goal may not be known to a simple user.

6. The sharp depreciation of cryptocurrencies, which can lead to the depletion of this cryptocurrency. In this case, the investor may lose everything at once.

7. Cryptocurrency does not provide full or even partial privacy to the user. If desired, the log of all its transactions can be tracked if there is a desire to do this. So called “mixers” will not be able to help you make your transactions anonymous. The history of the movement of your money will still be stored on the network.

This list of risks is not complete. We described the risks that the cryptocurrency user most often faces. With the development of the industry, this list may change dramatically. Both the direction of decrease and the direction of increase.

Cryptocurrency disadvantages for its users

All trading assets have their drawbacks. Cryptocurrency is no exception. A trading asset with a high percentage of return has a number of disadvantages that are critical for some traders. Below we will consider these shortcomings in more detailed manner and will analyze them.

1. Insecurity. This cryptocurrency has this flaw. Today it is and is in demand. Tomorrow it is gone and you can no longer sell it to anyone. The unreliability of cryptocurrency is manifested not only in this moment. Based on this drawback of cryptocurrency, most of its risks follow.

2. Price volatility. This disadvantage can be considered a plus at the same time. After all, it makes it possible to receive very good profitability from operations with cryptocurrency. Cryptocurrency volatility losses reach very large amounts. After all, no one can accurately predict how the course of the same bitcoin will behave for a long time period.

3. Cryptocurrency does not lend itself to accurate forecasting. After all, she is not attached to anything. The cryptocurrency rate is directly proportional to the interest in it. Most traders do not consider cryptocurrency as a means of investing for a long time. Many investors have negative experience of investing in cryptocurrencies for a long period. Losing your capital without knowledge in this area is very easy.

4. Illegality. In many countries, cryptocurrencies and any operations with them are prohibited. Based on this, you can not only be left without money, but also be punished within the country with it’s legislation fighting against cryptocurrency. Many countries actively oppose mining and trying to prevent money laundering through cryptocurrencies.

5. High prevalence among scammers. With the help of cryptocurrency, many fraudulent schemes are carried out. Deception can occur even at the stage of purchase of the cryptocurrency by the investor.

6. There are no guarantees. No one can guarantee the functioning of the cryptocurrency market. As well, as the fact of owning such virtual “money” does not give you confidence that your capital is in a safe place.

7. Transactions are irreversible. Having made a transfer, you cannot cancel it.

8. Vulnerability of cryptocurrencies. Yes, this problem will always exist. After all, technology does not stand still. The creators of cryptocurrencies are people. Vulnerability can be found and successfully exploited. And your money will no longer be yours.

9. Storage reliability issues. Having lost your secret key, you will not be able to regain access to your savings. As for online wallets, there are no guarantees either. The vulnerability of the cryptocurrency storage service software makes it possible to transfer your funds from the wallet without your knowledge.

Conclusion

In this article, we tried to go over the main disadvantage of cryptocurrencies, which will help you decide for yourself whether you should use them. We deliberately did not describe the advantages in order not to leave the topic of the article. Despite all the minuses, cryptocurrencies remain a means of earning for many traders. Given all the minuses and increased vigilance, you can get a very good profit. But, we do not advise you to chase it. Learn the maximum number of nuances before taking decisive action. Thus, you minimize the risk of losing accumulated capital. Awareness of your actions is the only guarantee of your success. And this applies not only to the sphere of cryptocurrencies.

TRADE OPTIONS

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

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