The problem with most cryptocurrency investors is that they treat the cryptocurrency craze like religion. They never listen to the inconvenient truth. Below are some realities of cryptocurrencies which the enthusiasts find hard to swallow;
Cryptocurrency is backed by nothing and its price can be anything between zero and infinity. This results in extreme price volatility. You need nerves of steel to trade in something like that.
Cryptocurrency is not regulated by anyone and in case of loss there is no recourse in law or anywhere else. There is no one in charge. Nobody can manage the chaos in that space. It is a technical madhouse in which order cannot be enforced.
Cryptocurrency investment and trading carries such high risks that it cannot be differentiated from gambling. Such trading is highly speculative and carries massive risks because there are no circuit breaking mechanisms during times of high volatility.
Cryptocurrency trading uses computers and exposes the traders to risks of hacking. Your entire holding can disappear in a flash.
There is a lot which is unknown about cryptocurrencies. As such, a lot of scammers have built their business around these virtual currencies. It is hard to tell what is fake and what is real. It is impossible to tell what will last and what will fade away soon.
Investing in cryptocurrencies is an investment in hope. The future of cryptocurrencies remains shaky. The jury is still out there as to whether this is the greatest financial scam in history or whether it is the ultimate investment miracle.
The idea that a person can create money using a computer sounds too good to be true. If something is too good to be true it probably isn’t true. The cryptocurrency fantasy is impressive but not convincing.
The anonymity of cryptocurrency trading makes it susceptible to criminal activities. As such, risks of regulatory crackdowns will always be there. Such a crackdown can easily render your investment useless as cashing out could be outlawed.
Always bear these things in mind before taking a plunge. Also remember the risks of gambling such as addiction and emotional intoxication. Something this speculative can be addictive and enslaving.
Before trading in cryptocurrencies, it is better to trade is in less risky assets in order to appreciate how such trading works especially with respect to the cyclical nature of markets.
© Ephraim Njega