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Cryptocurrency Risks and the Advantages of Cryptocurrency Trading

  • July 31, 2020

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Cryptocurrency Risks and the Advantages of Cryptocurrency Trading

Do you know the risks in trading cryptocurrency?

It is a fact that dealing in cryptocurrencies can often be fraught with risks because the digital currencies are vulnerable to many types of dangers that are there in the virtual space. Moreover, buying and selling pose a greater risk compared to trading because, in trading, the cryptocurrencies are not bought or sold exclusively. Rather the CFD (Contract for Difference) is made use of in trading that eliminates the risk quotient to a large extent. Additionally, with trading sites you can get free access and stay assured to a large extent.

Introduction to Risk

But the risks associated with them should be known so that measures can be taken for their safety. Therefore, in the following sections, we take a look at the risks of cryptocurrency investment and the ways in which cryptocurrency trading can be helpful in maximizing one’s profit.

The risks in cryptocurrencies investment – There can be a lot of risks while dealing in cryptocurrencies, and some of them have been listed here for complete understanding.

Related: Risk vs. Reward: Is Your Investment Worth It?

Risks in crypto investing

  • Hacks – As valuable digital properties, cryptocurrencies have often been targeted by sophisticated hackers using state-of-the-art technologies. Online wallets are provided by cryptocurrency exchanges so that the digital currency can be stored safely. Investors having cryptocurrencies in online wallets are vulnerable to hacks when there is a sophisticated attack on wallets and exchanges.
  • Regulatory issues – Governments around the world have consistently looked at cryptocurrencies with a dubious look. There can be many reasons for the same, ranging from internal to the digital currency's high volatility. Thus, administrative clampdowns have been a constant feature on many cryptocurrencies, and that has conveyed a negative environment for cryptocurrencies. The result has been a series of huge losses for cryptocurrencies in many instances.
  • Scam/counterfeit ICOs – Initial Coin Offerings (ICOs) offer a superb chance to investors to enjoy the price appreciation of a crypto coin from the earliest stage. While profits from ICOs can be significant, investors may lose their cash even before reaping the rich rewards. Without conducting a due examination, investors can fall prey to a lot of dubious ICOs whose only aim is to trick investors and create a scam.

The above dangers have consistently constrained the capability of cryptocurrency investment, with the target of increasing prices later on. Together with some other factors like high volatility and no dividends, now most investors repose their faith in CFDs. It can be the ideal approach to make profits from the financial value developments of cryptocurrencies.

What is CFD trading based on?

CFD trading is based on forecasting the change in the price of available coins, without really possessing them. This basically implies that investors have the one of a kind chance of making a benefit whether the prices fall or rise. Also, while trading CFDs in cryptocurrencies, investors don't need to consider the risk factors that have been discussed above, as they will only be related to speculating the changes in the price of the crypto coins and tokens that they are dealing in.

What you need to know about trading sites

There are many trustworthy and reputed trading sites, and agencies that offer cryptocurrency CFDs to all investors, irrespective of the geographical region. Some of the advantages with a good trading site that can be accrued while trading in cryptocurrency CFDs are listed here.

  • Leverage – Increase the potential of profiting while trading CFDs in cryptocurrency by having leverage factor till 20:1. On other financial resources like Forex, merchants can get leverage levels till 400:1.
  • Short Selling – You don't claim the fundamental asset while trading CFDs in cryptocurrency. This implies investors can even now make benefits by speculating on falling costs.
  • Automated Trading – Some of the trading sites feature state-of-the-art technology that can help in facilitating fast and automated trading. They make use of advanced bots and sophisticated algorithms that continuously compares the market rates for the benefit of investors.
  • Low Trading Costs – There are many well-known and credible trading platforms that offer commissions as less as 0.5% so that investors can stay hooked to them.


From the above discussion, we can clearly see that there can be a risk with cryptocurrency buying/selling but a very low risk can be attributed to cryptocurrency trading. It is due to the inherent nature of both the practices and that is why there is a greater interest among investors towards cryptocurrency CFD as one can stay financially secure and yet earn high returns.