The Dark Side Of Cryptocurrency That Investors Fail To Realize
Cryptocurrency has become popular due to the media hype and of course its profitability factor. The feature of profitability largely attracted investors to trade in this market. The demand has led to release of new cryptocurrencies. Considering the profit factor, many investors blindly enter to trade cryptocurrency without proper due diligence and basic knowledge of trading. As a result, investors face a huge loss.
Most of the investors are only aware of the positive aspects of cryptocurrencies such as the peer-to-peer transaction, less transaction cost, highly secured transaction due to cryptographic codes and Blockchain ledger, decentralized market etc. However, nothing interesting is ever completely one-sided. Yes, cryptocurrencies do have cons which every user must be aware of before initiating the trade.
1) Variety: As the market is evolving continuously, there are more than 1500 cryptocurrencies in the market today. Half of the cryptocurrencies out of the total lacks marketability and few are not legitimate. Hence, a trader must have a clear vision of the currency he would like to trade. A trader/investor must be cautious before entering this market irrespective of its fame.
2) Widely accepted: While bitcoins are accepted for purchase of goods/services, not all the merchants accept cryptocurrency as a medium of exchange. Thus it is difficult to trust cryptocurrencies for purchasing goods. The value of currencies is also unstable. This causes a lot of chaos while initiating the refund process.
3) Internet/System: To trade in the cryptocurrency market, one would need a stable internet connection. Failure or downfall of internet connection could bring a huge loss. Further, there are chances that you might lose your wallet if your system crashes or a virus affects and corrupts all your data. It is difficult to retrieve your coins from your system in case of any crash. This could bring an investor into bankruptcy.
4) Trading robots: Trading robots are computer programs designed to connect with exchanges to monitor and track the market trends. Based on the observation, trading robots guide investors in trade execution. Increase in demand for cryptocurrencies gave rise to the creation of thousands of trading robots. There are few trading robots like Infinity App Review that is just a scam indented to mislead the investors/traders. Watch out before you purchase any trading bots.
5) Reverse reaction: It is easy to purchase cryptocurrencies, however, selling them and realizing the value is difficult. When the goods purchased using cryptocurrencies are not up to our expectation, returning the goods and realizing the money is a herculean task. As there is no central authority to govern the cryptocurrencies, none can guarantee even the least value.
In addition to the above, there are still pitfalls about cryptocurrencies. One has to look into various aspects before beginning to trade in this market.