Risks And Returns of Trading Crypto Currencies

Just like any other business, it’s always important for one to understand the risks associated with investing in Crypto Currencies.

This helps you to plan accordingly and know what to expect and how to maneuver around to attain success.

And just like stock markets, most of the risks associated with crypto currency are volatility, speculation etc.


The unexpected changes that at times maybe drastic in the market trend can bring about sudden sharp deters in the prices.

These prices at times drop by hundreds and thousands of dollars.

Prone to Error and Hacks

When it comes to doing business online, nothing is perfect as there are human beings involved.

Therefore human error can times sprout up plus other technical malfunctions.

Hacking is also possible especially if the system is not strong enough to detect such hacks and therefore someone should be familiar with all these before investing in blockchain.

Hard forks and Cessation is another risk of investing in crypto currency.

Hard forks in blockchain refer to “what happens when a blockchain diverges into two potential paths forward”,
“a change in protocol” or
a situation that “occurs when two or more blocks have the same block height.

When hard forks happen, there may be huge price uncertainty/volatility in the market.

This could lead to prolonged suspension of trading if there are no reliable prices from the underlying market.

Although different block chain companies do notify their clients about these hard forks, one should always take an initiative just like how they would do in any other business- monitoring and evaluation.

Lack of Regulations

There is lack of regulations by both the central banks and governments.

However, different countries have started picking up interest in them and regulations have started coming in place slowly.

Questions on whether to classify them as virtual currency or commodities have also risen up.

Lack of inherent value is another problem associated with Crypto currency.

Infrastructure stability problems due to fast growth

Advantages Of Investing In Bitcoin

Lower Fraud Risks And Transparency

Crypto currencies allow buyers to finish all the transactions minus revealing any private financial details to the seller.

This is due digital cash that makes it hard for hackers to steal. Ones real identity is a top secret.

It also helps to prevent data breaches.

Basically when using block chain technology, ones data is confidential and an anonymity.

The transparency further enables transactors to carry out business at their own pace with maximum freedom.

Maximum levels of security due to the fact that there is use of block chain technology.

Generally a user has complete power over the whole business.

Easily accessible

Trading in crypto currency offers the users a chance to easily access them at their own convenience.

This is due to the use of smartphones and computers meaning a user can access them at his/her own comfort zone.

This is unlike the traditional bank methods, credit cards among others.

Crypto currencies are mobile

This translates into easy accessibility for the users.

Unlike banks where clients have to walk to the infrastructure, Bitcoin users can access their transactions wherever there is an internet connection.

There is also no need for personal information while doing transactions.

Low transactional fees for worldwide services

When it comes to carrying out international transfers, the fees are charged are low compared to the traditional means of cash transactions.

This is due to the lack of middle men such as governments etc.

The transactions are also very fast because they don’t require the normal bank information that at times makes people to wait for days.

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