IT’S IMPORTANT TO UNDERSTAND THE RISKS INVOLVED
Because smart people understand the risks involved.
It’s important to understand that crypto asset has risks. There is no guarantee that any project will be successful. In fact, there’s a non-zero chance an asset or project you involve in could fail, or the value might drop below the price you bought it at.
What are the risks with crypto?
Okay, so if you’re watching this, you probably want to get involved with crypto? Great! But wait! We want you to do it in a safe and responsible way.
It’s important to understand that crypto buying is risky and crypto trading is very risky.
So if you’re just beginning your journey into crypto, understanding the risks involved and how to best protect yourself against these risks is one of the most important things you can do.
Now before we talk about the risks, If there’s one thing you take away from this video, it is the importance of being responsible for your own financial decisions.
In crypto there’s a saying called DYOR. That means Do Your Own Research.
Which is another way of saying – don’t go blindly into something based on what someone on the Internet said. Including me! It’s important to research a variety of sources and form your own opinion. Remember - nobody can tell you if you should get involved with crypto. That’s up to you. We can’t give you financial advice!
So with that said - what are some of the risks?
Firstly, protecting your capital is key to any investing strategy and it’s even more important in crypto because the market is prone to extreme price swings.
If you’re just starting out, a sensible approach is to only spend money that you wouldn’t miss or are prepared to lose if something goes wrong. That might be $100 or $1000. It’s different for everyone, but it’s not a good idea to spend all of your money or take out a loan.
Secondly, you’ve probably heard that the crypto market is volatile, which means prices can go up quickly and go down quickly.
In crypto extreme run ups in price and then extreme crashes are common. This can be very stressful if you have too much money invested. If you’re not prepared for that volatility, you’re not ready for crypto.
Thirdly, it’s important to understand that crypto asset purchase can be speculative. There is no guarantee of success. In fact, there’s every chance that an asset or project you involved in could fail, or the value might drop below the price you bought it at.
Next, there are existential risks such as:
- blockchain technology is still new and unproven at scale
- Governments could crack down on crypto with lots of regulations
- you could get hacked or an exchange that holds your crypto could get hacked…
- and finally, you should know that crypto is full of some of the smartest scammers in the world who do nothing but sit around dreaming up sophisticated ways to scams noobs out of their crypto
All of these scenarios are possible
But we’re not trying to scare you, we just want you to be a smart investor and be aware of the risks.
If you do decide to invest, think about your timeframe. If you believe in the market you might invest in one or two of the bigger cryptos like Bitcoin and hold them for a few years. Then you won’t be so affected by short term price changes.
If you want to be a crypto trader, start slowly. You will make mistakes so if you must trade, learn with small amounts and don’t go all in. You want to buy at support and sell at resistance, if you don’t know what that means, you shouldn’t be a trader!
Finally, please understand that you and only you are responsible for your financial decisions. Any content posted by Dacxi should not be considered financial advice or a recommendation to buy crypto assets. Before getting involded with crypto we recommend getting professional financial advice from a registered financial adviser.