Bitcoin is the most frequently traded digital asset, although its putative millionaire-making peak has passed. It has tremendous profit potential for astute investors after seeing exponential growth since its first debut in 2009. You can read more about the platform if you are interested in Bitcoin trading.

Trading bitcoins, however, requires extreme prudence due to the high stakes involved. Bitcoin’s value, and all other cryptocurrencies, is mostly governed by supply and demand, as opposed to currencies traded on the foreign exchange markets, whose values are affected by governments, economic activity, and world events.

Begin With a Minimal Amount of Resources

Our first advice for bitcoin trading is to start slowly and with a small sum of money. Bitcoin trading is thrilling because a small percentage of investors may make large gains quickly, but it is also extremely difficult and risky.

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Advice is to use a reliable and safe wallet.

Cybercriminals can easily access funds stored in hot wallets since they are online. Your funds are safer with a cold wallet since they are stored offline. If you need access to your bitcoins quickly and simply store a small quantity, a hot wallet may be all you need; just make sure the service is reliable. A cold wallet is preferable when storing large amounts of bitcoin.

Choose the right trading platform

To make your investment safe and hassle-free, it is significant that you should use the right platform for trading. For example, you should check whether the platform offers good customer support, transaction and withdrawal fees, and the different types of cryptocurrencies available on the platform. 

We’ve compiled a list of the top 10 dangers of buying Bitcoin and included suggestions for avoiding them.

• The Inconsistent and Unpredictable Market

• Bitcoin’s value is volatile and always changing. There was a value of $6,461.01 for a single bitcoin on November 6, 2018. On December 17, 2017, if you wanted to buy a bitcoin, you would have paid more than $20,000. The 24th rolled around, and investors couldn’t recoup more than $14,626 from their purchase by then. 

• Theft from Computers or Cybercrime

• Due to the technological nature of cryptocurrency, it might be the target of cyberattacks. Hacking poses a significant threat with no recourse for recovering stolen or lost bitcoins. Even if you have a secure cryptocurrency wallet, an exchange is still a more probable target for hackers. It’s also very uncommon to lose your wallet’s key and be unable to get your coins back even if you have a wallet. Make sure you have the safest bitcoin wallet by doing thorough research.

• Fraud

• The bitcoin market is vulnerable to hacking, but there is also substantial fraud. Since bitcoin’s meteoric climb to fame, more and more people are trying to buy and sell cryptocurrency online, but certain exchanges may be fraudulent. 

• There Is Minimal To No Oversight

• There are currently no significant restrictions in place for the bitcoin industry. Cryptocurrencies are still too young for the government to take a firm stance. Because it is not subject to taxation, it may seem like a good investment. However, if bitcoin were to challenge official money, the absence of taxation may cause issues. 

• 6 – Dependence on Technology

• Bitcoin relies on the internet and computer networks to function as currency. Digital coins are mined, traded via smart wallets, and monitored by several automated processes. Cryptocurrency has no value apart from that technology. There is no tangible asset to secure the value of the money or investment. Bitcoin owners are more exposed to cybercrime, online fraud, and a potentially shut-down system because the money depends entirely on technology.

• Restricted Application

• Bitcoin might be the beginning of a new type of money exchange, but now, it is only accepted by a small fraction of online merchants. Overstock, Newegg, and Monoprix are just some online retailers supporting buying and selling cryptocurrencies. Using their cryptocurrency, Bitcoin holders can also book flights on AirBaltic, Air Lituanica, and CheapAir.com. Regrettably, not all businesses accept bitcoin as payment.

• Economic Damage

•  More individuals buying bitcoin leads to inflationary bubble conditions. Many individuals will be stuck with cryptocurrencies they want to sell but can’t because of the inevitable bubble collapse. An investment failing to produce a profit may devastate one’s financial well-being.

Is This Currency Or An Investment Opportunity?

Cryptocurrency has the potential to function as a reliable online currency exchange; nevertheless, most people who purchase bitcoins do so intending to hold onto them for the future, much like investing in the stock market. For others, bitcoin works as a safe retirement investment. 

1) Newer Technologies

Cryptocurrency is a relatively new financial innovation. Bitcoin first appeared approximately ten years ago and has still not matured into a reliable currency. Given all the disruptions over the previous several years, there’s no knowing how the market will develop. The current iteration of Bitcoin might become obsolete in the future.

Conclusion

Studying Bitcoin trading is challenging, but it pays out if you do it right. Remember that just like any other investment, Bitcoin has the potential for high and low returns. You should do your homework, learn the ins and outs of the industry, and assess your risk tolerance and financial goals before investing.

Cover Photo by Simon on Unsplash

DISCLAIMER: This article is sponsored and does not substitute for professional advice or help. Any action you take upon the information presented in this article is strictly at your own risk and responsibility.