For many people, cryptocurrency trading is a no-go area. For others, it’s the best thing invented since the internet. However, like every other venture, crypto trading has its benefits and downsides. This article will break down some of the pros and cons of trading cryptocurrencies, especially for beginners.
“Governments will buy Bitcoin ten times more expensive than it is today”- Olawale Daniel.
Pros and Cons of Crypto Trading
Many people usually ask if there is money in crypto trading. The truth is there is money to be made and some to be lost. While cryptocurrencies can make some profits, it is not guaranteed they will help you to get rich quickly. Most people have this misconception about crypto trading. However, it would interest you to know that millions of dollars are moved between several crypto exchanges every day. In January 2022, popular exchange Binance recorded an incredible $80 billion in trading volume. Other exchanges, including FTX, eToro, Kucoin, and others, have also recorded mind-blowing feats within the space.
Despite the crazy amount moved daily, crypto trading still has pros and cons. Let’s look at some.
Pros of Crypto Trading
- There are no closing hours in the crypto market. Unlike traditional banking and the stock market, crypto trading allows you to trade at any time of the day.
- Transactions are fast and location-independent. One of the problems cryptocurrencies solve is the global payments issue. Crypto trading allows you to buy Bitcoin, Ethereum, Sandbox, or any other coin from anyone in the world, regardless of their location.
- Transactions with crypto trading are transparent. Anyone can access the details of a crypto transaction. This is possible because of the power of blockchain technology which provides a public ledger for anyone to access.
- The barrier to entry to starting crypto trading is extremely low. You can begin a crypto trading venture without needing much capital because there are rewards for participating in the system. You can win airdrops and get a Non-Fungible Token (NFT) for free.
- Ownership is secure and can rarely be tampered with. With a digital wallet, crypto trading gives you the power to own an asset with less risk of losing it to fraud or hacks.
Cons of Crypto Trading
- The crypto market is highly volatile. Even though you can make insane profits with crypto trading, the market is very unpredictable. You can lose your invested capital without proper risk management or education.
- Crypto trading is not necessarily a long-term investment. Although there are “long-term coins” in the market with solid fundamentals, not all cryptocurrencies can trade for an extended period. Some lose their credibility; others have issues with their network.
- Beginners can lose money to crypto trading. Proper understanding is required for you to comprehend the crypto market. Whether it’s the knowledge of technical analysis or the fundamentals of specific coins, you should educate yourself. This is one part newbies skip before losing their capital to the market.
- Lack of regulation: Although trading cryptocurrencies is somewhat secure, the lack of intermediaries or government regulation poses a scalability threat.
- Transactions are irreversible. This is one advantage that traditional finance has over the cryptocurrency market. If a transaction is sent to the wrong wallet industry, it cannot be automatically reversed.
In conclusion, crypto trading can be profitable. At the same time, it could rip you off your investments. It is not advisable to start crypto trading without knowledge of the market. Crypto trading has its pros and cons, and you should do due diligence before getting on the journey.