Rags to Riches: The Risks and Rewards of Cryptocurrency

Regardless of how you look up cryptocurrency online, you will always end up with colourful results. However, the field of crypto is still unfamiliar to most people. There are some who haven’t heard such a thing despite its existence for more than a decade already. A lot has happened since the sketchy beginnings of the cryptocurrency movement a decade ago.

The Difference in Gambling and Investing

Regardless if you include cryptocurrency in the equation, gambling and investing have their similarities. Both require the player or investor to put their capital at risk to have the possibility of reaping great rewards or maximum profit. However, the only difference between the two is that gambling will never be certain in which bet or investment will have the best profit. 

When it comes to investments, you take a calculated risk that you have gained from sources of information to have the best possible outcome. Not to mention that investors also have the option to pull out from their investment to avoid major losses that can potentially result in bankruptcy.

Taking A Calculated Risk

Even though DentaCoin, Bitcoin, Ethereum and some others are relatively new, it doesn’t mean that they are all bad. With all the available forms of trading and financial investments in cryptocurrency, it still has its risks. New or tenured investors are still experiencing massive losses parallel to their major gains. Compared to traditional investments, cryptocurrency is still new and developing. With that in mind, let’s look over the risks with investing in crypto:

• Market Risk

Like any other financial investment, the market for cryptocurrency will be experiencing a sudden decrease and a sharp increase in its value. A Citibank analyst anticipated that Bitcoin might hit as much as $318,000 by the end of 2022. As the market for Bitcoin is constantly fluctuating and volatile, investors are now turning to secured and trusted apps for crypto trading. It helps new and experienced crypto traders into the timing and accuracy of trading to fully optimize one’s profitability.

• Insurance Risk

Through security and investment programs are where trading investments are usually insured. Since crypto is an emerging market, trading, exchange, and accounts are not yet insured by any federal government.

• Security Risk

Numerous investors of cryptocurrency buy and sell their crypto on various platforms. With the current rise of technology, it’s now convenient and accessible to have a virtual financial exchange. Cryptocurrency exchanges are still currently digital, thus the risk from getting hacked, malware, and the potential to experience an operational glitch in the system. 

• Regulatory Risk

Capitalizing cryptocurrency is easy, especially for someone who is reluctant to take risks, similar to any other financial and trading investment. Currently, the government is not regulating the use and exchange of Bitcoins. However, the government is slowly accepting the existence of bitcoin

The Importance of Risk and Reward Management

When engaging in any form of gambling, players should always remember to assess the situation, especially with the risk and reward system of cryptocurrencies. Placing your bets in cryptocurrency gambling without understanding it fully can have potential risks that will ultimately result in unfavourable outcomes. Investors should master scaling the potential risks in investing and then compare those risks to real rewards as it guides you in developing better strategies.

What Comes Next

Concluding whether investing in cryptocurrency is a risk depends on the investor’s perception. 

In the end, cryptocurrency would still need to earn its place in the future. However, many enthusiasts believe that the opportunity is there, and numerous people who have adopted the technology are now focusing on building various uses for it. While merchants that accept cryptocurrencies are slowly rising, they are still in the minority. Before cryptocurrencies are widely used, it first needs to gain widespread acceptance among consumers. 

Should You Invest in Cryptocurrencies?

When you are considering investing in crypto, recognize that you are running the risk of losing most, if not all, of your investment. Crypto is a good investment if you want to get exposed to the latest demand for digital currency. However, if you think buying crypto is too risky, there are always other alternatives that you can potentially profit from the fast growth of cryptocurrency.