Explore the suitability of crypto for beginners. Gain insights and make informed choices with our guide for novice traders entering the crypto market.
Crypto trading has always been a rather controversial topic, with many financial experts and analysts advising against it. And yet, this didn’t seem to stop traders from jumping on board or dim crypto’s appeal as an investment venue, whether they chose to buy bitcoin p2p or acquire it through other methods deemed worthwhile. Despite the numerous hurdles and the never-ending polemics surrounding this asset class, the industry continued its growth largely unbothered, with an increasing number of individuals and, in more recent years, businesses and institutions flocking to crypto.
The rising popularity of digital assets is probably the only aspect that no one can disagree with. The entire world has witnessed how cryptocurrencies evolved from an obscure concept that didn’t catch too well with the general public in the beginning into a highly successful market able to compete with long-established assets and revolutionize the financial industry in a span of just a few years. The ever-growing acceptance that digital currencies have been enjoying lately has also made it easier than ever for anyone to get into crypto trading. Nowadays, one can easily streamline their crypto trading process with the help of a crypto trading bot, thus saving time and effort and increasing their chances of success.
However, just because cryptocurrencies have grown leaps and bounds since their inception and everyone appears to have taken an interest in them doesn’t mean one should leap straight into crypto trading simply because of the hype and the potential earnings they could benefit from. This is especially true for beginner traders, who more often than not lack the experience and expertise to make sound financial decisions regardless of the market they choose to dabble in, let alone when it comes to high-risk assets like crypto.
So, if you’ve just stepped out into the fascinating and highly intricate world of trading and are currently toying with the idea of getting into crypto, here are a few aspects to take into consideration so you can decide if this would be a smart move for you or not.
The new cool kid on the block
Digital currencies didn’t reach the level of fame and prominence they enjoy at the moment for nothing. There are very good reasons why people from all walks of life are so taken with this asset class. For starters, crypto can serve as a hedge against inflation, which, in the context of an increasingly unstable and unreliable economic landscape like the one we’re dealing with right now, is more than welcome. Crypto might just be able to help patch up the gaps and shortcomings in the global financial system by giving people a viable alternative to national currencies.
Blockchain technology supports crypto, which is independent of centralized authorities in contrast to government-issued fiat money. What’s more, most crypto projects have a predetermined supply cap by design, which ensures scarcity and limits inflation risk. Their potential as a long-term store of value and the distinct breed of millionaires they’ve created since they’ve been around alone are enough to explain crypto’s metamorphosis into the financial powerhouse of today. But there’s more to it than meets the eye.
Blockchain technology, which lies at the heart of digital currencies, is the very same technology that has the ability to revolutionize every line of work out there. Its use cases span across numerous industries and sectors, from healthcare and education to supply chain management and decentralized finance. Seeing that the blockchain is dubbed the technology of the future and is gaining more ground by the day, there’s certainly a huge incentive to be a part of it in one way or another, and investing in crypto is the most accessible way to get involved and express support for this innovation.
And to top it off, crypto’s decentralization also provides a solution for the unbanked and underbanked—the people of the world who, due to government restrictions and regulations, lack access to conventional financial services and whose number amounts to 1.7 billion by the latest count.
As you can see, digital currencies have a lot of things going for them, and it wouldn’t be wrong to say they’ll be around for a long time. This means that trading and investing in crypto, whether individually or with the help of a trading bot, can be very lucrative activities if approached properly.
The (not so) hidden risks associated with crypto trading
We could go on forever about the advantages and possibilities that digital currencies offer, but that might make you believe there are only benefits and zero risks to crypto trading, which unfortunately isn’t true. In order to form a balanced view of this asset class, one needs to take into consideration both pros and cons, so now it’s time to focus on the latter.
There has been a lot of discussion about how people might use digital currencies on a daily basis as a form of exchange to buy the goods and services they require and one day enjoy the same level of widespread acceptance as fiat money. While nowadays there are considerably more companies and organizations accepting crypto as a form of payment than a few years ago, that’s not how cryptocurrencies are used primarily. Speculative trading is the main use for crypto at the moment, and that’s a pretty rocky foundation to build on. With extreme volatility as their main characteristic, digital assets might not be the best choice for inexperienced traders.
Then there’s also the risk of scams, thefts, and losses, which have given crypto a bad name. Without a central authority to govern them, the responsibility for keeping assets safe falls largely on the traders’ shoulders. Therefore, anyone who goes into crypto trading should be aware of the risks they might expose themselves to and adopt adequate safety measures to avoid them.
Trading crypto can be a highly rewarding activity, but it can also be very daunting and risky for beginners. So whatever you decide to do, make sure you educate yourself on the matter and proceed with caution.
