Ask Leo: is risk associated with investing in crypto currencies worth taken?

6 mo
LeoFinance
4 Min Read
736 words

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“Someone is sitting in the shade today because someone planted a tree a long time ago.” —Warren Buffett

The main first risk of investing in crypto currencies is correlated to its unpredictability or being volatility in nature because of the up and down of the market trend. But investing in crypto currencies is risky but also inherently very advantageous and this is one thing that one can turn a blind eye to since taking the risk is really worth it but one must understand those risks before investing in crypto currencies.

Meaning of Risk

Risk can be refer to an uncertainty that an investors is willing to undergo to acquire gain from an investment. A person who is willing to take a risk is involving his or herself in to dangers and that's what investing in crypto currency is all about.

What are the risk involved

There are different types of risk involved in investing in crypto currencies which are extremely dangerous and they varies from each other. There is something called systematic risk in crypto currencies,is risk that involve the entire market or group sector of the market and example of this are inflation changes in interest rate, recession, war, natural disasters and so on. Systematic risk involved all the investment or securities and this can not be avoided through diversification. While we also have unsystematic risk which can be easily controlled through diversification and this kind of risk is caused due to the internal market factors. Example of unsystematic risk involve a new competitor in the market place which may likely take crucial share from the company invested in.

Apart from these, there are still other risk associated with investing in crypto currencies which are :-

•Cyber theft and hackers - the fact that crypto currency are digital assets held in digital wallet and even traded by digital currency exchange is one the biggest concern because of the online cybercrime and the way people used different varieties of phishing attacks to gain access and take control of one crypto currency wallet. Many people have fall victims of such circumstances and which I was also among. I fall victims of phishing attacks within three months of joining hive blockchain and all my Hive token and HBD was vandalized.

• Loss of keys or destruction - crypto currency deals with high security and that's the reason why we received some public and private keys immediately after creating any crypto wallet and that's the reason why it is better to have those keys backup because of unforseen circumstances. Some people have lost all there assets through this which leads to emotional consequences.

• Unregulated trading platform - since the crypto currency has already taken all over the world and almost everyone is in to it. This has leads to creations of different Unregulated trading platform which are not advisable to use for crypto currency exchange. Usually new investors fall victims of such circumstances because of lack of experience.

• Another risk in crypto currency exchange is peer to peer transaction P2P. Despite the transaction being a peer to peer exchange, still people commit different fraudulent such as receiving crypto and do not pay and that's why anytime I want to trade on binance, there is this warning message which says "Don't release Crypto until you received your payment.

Reason why it is worth taken the risk

But despite all these risk mentioned above, I sometimes asked myself if those risks are worth taken. But I believe they are very worth taken in as much one follow the right procedure and crypto currency is good for dependable long term store of value and good way to obtain immediate revelation to the stipulation of digital currency and also, investing in crypto currencies is more profitable that one can not overlooked as one can be financially stable if we have the patience and understanding required to bare the risk. The risk is worth taken and that's the reason why millions of people are in to it if not billions. And sometimes I believe the percentage of people involved in a specific things usually judge the situations.

"In the middle of every difficulty lies opportunity.” – Albert Einstein

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I agree that it's worth the risk, what most people don't understand is that investing well requires a lot of knowledge and study, they invest without having the slightest idea what they're investing in just because someone said it or because the investment in question is in the media and obviously lose because investing without knowledge is betting with your money.
Excellent post.
Thanks for sharing.
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