Risks of Cryptocurrency

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November 25, 2022
Risks of Cryptocurrency
Despite the advantages of cryptocurrency, this rising technology also poses several risks. These risks will be discussed in the subsequent sections below.
Loss of Profit
The cryptocurrency industry is quite erratic. Because the price of tokens and coins largely depends on the activity of the people involved in the cryptocurrency industry, it is pretty volatile. In the realm of cryptocurrencies, there is a genuine possibility of losing money. The adage "Invest what you can afford to lose" is true. When an unpredicted occurrence occurs, there is a loss of profit. It occurs when the graph of a particular cryptocurrency does not climb as rapidly as expected, and people do not withdraw their money as soon as possible in the hopes that the graph will rise again and they will profit.
This kind of loss can be prevented by having excellent technical analysis skills and a solid understanding of the cryptocurrency market graph. Some investors even pay experts who can forecast the rise and fall of particular currencies in the cryptocurrency sector. Simple excitement about a coin might increase its value because investors are eager to invest their money in it because they believe it has a bright future. However, this type of hype is hazardous to participate in because the coin may lose value within days of the hype.
Risk of Hacking
Because the crypto world revolves around digital goods, the risk of a coin being hacked is very high. There have been cases of this kind of hack recently that caused the investors of this token to lose their digital assets and now are left in bankruptcy. In the case of Terra Luna, a crypto coin worth over 60$ per coin in real life, it dropped 97% of its value within one day. Investors and coin holders, as they say in the crypto world, are surprised to see their digital portfolio to be losing so much. That is why even a stablecoin such as the Terra Luna can be attacked by people online and make the coin holders of the said currency lose their investment as quickly as one day. Investing in green-colored cryptocurrencies like BTC has frequently advised ETH because their creators are backing them up. However, compared to betting on new currencies with low value, which might potentially treble in value or even make someone a millionaire, the predicted reward on these coins is tiny.
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