Cryptocurrency: What are the risks of investing in cryptoassets?

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4 months ago - 3 minutes read

Today the Bitcoin is national currency in El Salvador, I think we can also find supermarkets where we can make purchases with Bitcoin and many other things, I think in 20 years there will be only one currency in the world, and this currency will be the BTC.

Many people say that making money in cryptocurrencies does not have much science, what I mean is that some people think that making money in cryptocurrencies is really easy and with little effort and it is really the opposite, for this simple reason I want to explain a little bit all the risks and ensure that it is the opposite.



Some aspects to keep in mind: Volatility & Regulation

Cryptocurrencies are really very volatile financial assets and for this simple reason the Bank of Spain and other important financial organizations have issued important communiqués reminding that this is really very dangerous and we have to know very well what we are doing.

I want to summarize the risk of cryptocurrencies because I simply think it is very important, I want us to take into account all these aspects that surely are very important for you to understand why cryptocurrencies are a very delicate asset, here are some of them:

  • Cryptocurrencies and volatility: It is a great idea to really generate money in cryptocurrencies and for this simple many developers create a cryptocurrency and increase its price, I think we can consider this as FOMO, but this really happens with people who are carried away by the excitement of getting a high return and for this reason decide to invest, but I want to focus on mentioning about the price in the very short term, a cryptocurrency can experience large changes in price, this can generate large profits in favor, but we must also be very careful with the impermanent loss of our investment.

  • Regulation by major financial institutions: I think we have reached the most important point, for this simple reason I want to say that if you lose money or for some reason you get scammed, I think it is important to know that nobody is going to be able to do anything about it. But I also want to mention that the European Union is working on a regulation for cryptoassets and we must take this into account, many users have lost money and I think it is not very nice.

  • Hacking & Computer Fraud: Small investors should understand that it is really very possible that fraudsters and hackers attack us to take over our cryptocurrencies, I have read many articles that assure that this is really very dangerous, that is why I always recommend to be very careful.

  • BTC Mining & Environment: When cryptocurrency miners and especially BTC miners extract cryptocurrencies they are affecting the environment, I think this consumes a really huge amount of electricity.


Why cryptoassets have a bad reputation?

UST, many knew this cryptocurrency and especially knew what happened with LUNA, it is important to diversify your portfolio of cryptocurrencies because it simply seems to me that we can manage risk effectively, for this simple reason I think it is the most important, but not only LUNA ah ah been affected, I don't want to talk too much about this because it is simply not the purpose of this post, I want to focus on readers really understanding the risk that this has for small investors.

When BTC was created, it was created with the objective of having a p2p and decentralized payment, this is something that many have in mind and for this simple reason I wanted to mention that having an investment portfolio is a very important point.

I want to make clear some important tips for your crypto investments:

  • The most important thing, is to know in which asset we are investing.
  • Invest only money that you don't need or that you are willing to lose, this is very basic, but important.
  • I believe that a debt and an investment can be a fatal thing for your finances.
  • Long term investment is always safer.


See you in the next installment, remember that the material published here is for educational and entertainment purposes only, I am not responsible for your money and I recommend doing it at your own risk.


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