Beginner’s Guide to Crypto: Benefits and Risks

If you’re new to crypto, you’re probably both curious and a little overwhelmed. But should that worry you? Not at all – the journey to understanding crypto starts here.

Below, we explain in a simple and easy-to-understand way what exactly makes cryptocurrencies so exciting. We also inform you about some of the risks involved that you need to consider before investing.

No bank involvement: More transparency and control – but greater security risk

When cryptocurrencies first came onto the market, one of the things that fascinated many was their independence from traditional banks.

When you buy a cryptocurrency, you make the transaction without the involvement of intermediaries. This makes for a much more transparent trading system where you don’t have to rely on third parties. However, this freedom also means that there is little to no help to be found in case you be locked out of your crypto wallet should.

If you forget your password for a banking service, they can help you recover it or reset it for you. But with cryptocurrencies, you are at the mercy of the extremely small number of hackers who are able to break into people’s “stranded” crypto wallets – and even their success rates are low.

Volatility: Opportunity for big returns – but risk of big losses

Cryptocurrencies are notorious for their high volatility. One day a currency can be at its all-time low – and the next it could very well have shot to previously unheard of heights.

Of course, you can always make assumptions, and buying when a currency has reached a low, is what many would consider a pretty safe bet. In reality, however, you never know. If you’re lucky or have predicted correctly, you can become super rich super fast – or, if your guess turns out to be wrong, you can lose a whole lot of money.

Do you still want to be on the market? You can read more about crypto hereto stay up to date on currency values ​​and do your homework on the nature of crypto. Research never hurt anyone, and with crypto, you need all the help you can get.

The blockchain: safe from hackers – but scalable in the long term?

As we mentioned earlier, it is nearly impossible to hack into a crypto wallet – and the same goes for the rest of the infrastructure that supports cryptocurrency trading.

The blockchain remembers entries forever. Once you make an entry, it is stored across multiple computers in a highly secure, decentralized system. This way, no hacker can ever access the entire chain and corrupt it, making crypto trading an extremely safe venture in terms of cybersecurity.

An exciting new type of currency – that requires a lot of research

Entering the crypto world as a complete beginner is no easy task. The vast world of digital currencies is still very new, having only existed since the 2000s – unlike, for example, traditional stock markets, which have been around for hundreds of years.

It is nearly impossible to predict how cryptocurrencies will evolve in the future and whether they will even have a place in this world in, say, 50 or even 25 years. Investing in crypto is already risky, so you need to spend a lot of time and effort educating yourself about it to know what you are getting into.

But having said that, you are definitely in for an interesting ride if you decide to invest.