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Crypto 101: Risks of Investing in Cryptocurrencies

And how to avoid them.

We’re starting our weekly digest about blockchain and cryptocurrencies for those who haven’t entered this brave new world yet. According to Kaspersky’s Cryptocurrency Report, In 2019 the percentage of people who “fully understand how cryptocurrencies work” was around 10%. In 2020 with the rise of new tendencies such as DeFi and PoS, popularity of cryptocurrencies has almost doubled!

So, what is so attractive and at the same time deterring in cryptocurrencies? What are the risks and benefits? In this article, we will try to dispel all your doubts and fears about the crypto world and will show you how you can benefit from it.

Let’s start with top 3 risks and fears that hang over blockchain and restrain people from making their first cryptocurrency investments.

1. Instability of Values

Perhaps, reason #1 why people don’t take cryptocurrencies seriously is price fluctuation. One of the brightest examples is Bitcoin (of course). From $6,700 in November 2017 it has gone to almost $20,000 in December 2017 for a single Bitcoin. A short while after dropping back to $6,800 while now it’s somewhere around $12,000. More detailed price changes can be found here. Tremendous changes, right?

image from gartner.com
image from gartner.com

This is called Gartner Hype Curve for Emerging Technologies.

If you overlay it over the Bitcoin price chart it appears as if Bitcoin reached the Peak of Inflated Expectations right in December of 2017 and in 2020 it’s coming to a plateau of productivity.

This means that now Bitcoin’s price has returned from orbit and disillusionment and people seem to have a more reasonable outlook on the future of the technology.

If you look at most cryptocurrencies, the same fluctuation patterns can be observed. So, with a bit of an expertise and research you can start understanding the price changes and use them to your benefit.

If you’re still uncertain or have doubts about big players like Ethereum or Bitcoin, you can try investing in smaller projects. You will always have a chance to switch to Bitcoin or Ethereum, if using multi-asset wallets like citadel.one.

2. Mass adoption difficulties

In some countries cryptocurrencies are not accepted on governmental levels, while in others they are legal but local businesses or banks still don’t accept them.

However, the legalization is spreading around the world. For example, on July 22 Russian lawmakers have passed a bill that gives legal status to cryptocurrencies, but bans them from being used to pay for goods and services. Another big deal — Japan’s central bank — the Bank of Japan (BoJ) — confirmed it has created a new division to research and study the issuance of digital currency. Indian Prime Minister Narendra Modi has also publicly endorsed blockchain as an investment opportunity. More Crypto Regulation News you can read and follow here.

So, at this point we see cryptocurrencies more as an investment than means of payment. However, in the near future the situation may change.

Investing in cryptocurrencies today became very easy. You don’t need to open a brokerage account, a non-custodial multi asset wallet will be enough. You can read this guide on how to create a one seed multi-asset wallet and start earning a passive income from today on.

3. Theft

In the blockchain world you act as your own bank and take full responsibilities of your own money. To get access to your wallet each needs a personal unique key. Keys are not stored in the wallets for security reasons, so you have to keep your key safe at some place that you trust. Consider it as a physical wallet, if you lose it, or someone gets an access to it, your money is lost forever.

There are some ways to protect your cryptocurrencies. One of them is using a non-custodial wallet to store your assets. In this case you don’t entrust your money to third party platforms, and they are securely held in your own wallet.

Another way is keeping your money offline on a hardware wallet, like Trezor or Ledger. They are easy in handle and will definitely give you level up in your wallet security.

We hope that this article somehow helped you to overcome your fears and make a step forward into a new world of advanced technologies. Our Citadel.one team welcomes you to become a part of decentralized finance infrastructure and earn passive income with us.

If you have any further questions or still have doubts, our team will be happy to communicate.

About Citadel

Citadel.one is a non-custodial Proof-of-Stake platform for the management and storage of crypto assets. In the initial release, users can create public addresses for all supported networks with one seed phrase, connect their ledger or trezor device, or import an address generated by another wallet. The analytical dashboard provides relevant information on wallets’ balances and networks’ main metrics. One of the main functions of the Citadel platform is participation in the PoS consensus — users can stake and delegate their assets, claim rewards, and follow the latest network proposals in the voting tab. Citadel offers its users an instant cryptocurrency exchange service that allows fast and secure crypto assets swap, and it is also possible to buy and sell crypto with a credit or debit card.Our newsletter is full of up to the minute news about the world of DeFi and most recent updates on our celestial Citadel.One platform.

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Citadel.one is a multi-asset non-custodial platform.

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Citadel.One

Citadel.One

Citadel is a multi-asset non-custodial platform for the management and storage of crypto assets

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