Crypto investing has been one of the most profitable activities that have been possible in the last 10 years, with the return on investment from investing into Bitcoin when it first launch until today being north of 30 million%, and there being thousands of opportunities every day to be able to generate significant amounts of income using cryptocurrency investing.
One question that is always on the mind of new crypto investors especially is whether or not crypto investing is actually safe and while there are many investors that have made small fortunes from cryptocurrency, there have certainly also been a lot of people that have lost money as well and is important to consider how and why this happened in order to avoid it.
This guide were breaking down whether crypto investing is safe or not, starting with a look at how
crypto investing actually works and the relationship between risk and opportunity when investing in cryptocurrencies, before finishing off with a look at a few platforms that are specifically beneficial to use for crypto investors in 2021.
How Does Crypto Investing Work?
• What is Crypto Investing?
Crypto investing is the process of leveraging liquidity to purchase
digital coins with the hopes of profiting from its rise in value, cryptos are more popular among investors now than ever before and with over six-thousand now existing are great investments for those wanting to diversify their portfolio and holdings.
Cryptos are decentralized assets and are traded against investors on markets that never sleep which in and of itself is alluring to investors that enjoy round-the-clock trading sessions, and since crypto trading shares traits with stock trading in that graphs and trends are used to speculate prices, investing in crypto has become increasingly popular among old-timer stock traders that are familiar with the process.
Crypto investing is a great way to amass profits especially given the volatility of their markets which can give traders that strategically leverage swings considerable gains and short-term profits, and with access to advanced trading tools and financial products that vary from one exchange to the next, crypto trading can be profitably pursued by even newcomer traders with little experience.
Investing in crypto is done using decentralized exchanges and it is on these platforms where traders buy and sell assets to and from each other, and the greater daily trading volumes from these trades become is all the more volatile markets can be which is why beginners should only use platforms such as Binance or Kraken that offer trading tools making informed buys easier to execute.
• How is Crypto Investing Different to Trading?
Investing and trading are usually confused by most to be the same though each is unique in that they require varying mindsets and tactics to achieve profitability, and individuals can generate profits more easily when understanding how the two differ from one another.
Investing is when you open a long-term position in an asset based on trends and fundamentals with the aim to purchase low and sell high, and since those longing cryptos are long-sighted earners they hold through dips and do not sell due to short-term fluctuations through may begin hedging to help positions.
Investors are those that HODL and maintain holdings through both the down and upswings as they are betting on the price to rise over time, and because of the long-term speculation will often add to their holdings over time to increase potential gains even more.
Trading refers to a person whose goal is to produce short-term gains which they hope to earn by making trades based on current market trends, and since traders adopt the ‘ buy low sell high’, they are most at risk of loss as they are focused on short-term gains which due to volatility can be difficult.
• Is Crypto Investing Risky?
Crypto investing involves risks as with investments of any type though can be reduced or mitigated using exchanges that offer trading tools that help users make informed trades though by following trends or seeking counsel from an experienced trader or crypto broker can make trades more profitable.
No system is perfect which is true for even the investment strategies of seasoned crypto traders with years of trading experience but because crypto values tend to follow trends and high-low values, they can be traded profitably at reduced risks when traded based on data and not uneducated speculation.
Cryptos are known to be volatile as they are decentralized assets of value not back by governments no physical commodities like gold or silver, because coin values are driven by proofs-of-concept and the trust investors have in the coin they are subjected to greater valuation swings which in either direction can be profitable depending on the leveraged trade type.
Crypto investing is most risky to beginner investors with little knowledge of the crypto market as many may see upward trends as quick-profit opportunities without considering that values can retract at any time, as such, it is important to use trusted exchanges and informed speculation before investing.
With Risk Comes Opportunity
• Potential for Huge Income with Crypto Investing
One of the greatest attractions to crypto is the gains they can bring as their volatility and increasing demand has encouraged investors in mass volumes to move liquidity into crypto markets, the reason being is that cryptos are known for achieving single-day gains traditional stocks rarely achieve.
Margin trading is one trade type that can significantly increase the profits investors earn as it allows people to leverage exchange liquidity to increase the size of positions, this trade type enables investors to reap the gains of higher liquidity for a fractional up-front investment with $100 on a 10:1 leverage allowing investors to reap the profits or losses of a $10,000 position.
Given the billions of institutional dollars pouring into crypto and the growing number of investors adding cryptos to their portfolio, the potential for huge income and profits is only becoming greater as most coins have limited supplies but growing demand, which is one reason Bitcoin has such a high valuation.
Cryptocurrencies have redefined how people transact and investors trade and given its widespread use and adoption in industries spanning from entertainment to insurance, the stakes and potential for gains have never been greater with many speculating the price of Bitcoin alone to reach six-figure valuations within the year or two to come.
• Crypto Investors Set Their Own Work Hours
There is no greater enjoyment than having the ability to set your own work hours and this precisely is what crypto trading enables traders and investors to do, and because trading hours never close there is no time of day in which potential profits cannot be earned.
Cryptocurrencies exist on blockchain which is a decentralized technology that not only stores assets but facilitates the transfer of them between wallets, the blockchain is supported by a global network of computers that lend processing power to it which are owned by independent miners around the world.
Miners contribute to blockchain and help to process transactions which when done earns them rewards from the network for their assistance, this is one way to earn money with crypto and has enabled miners from all around the world to earn income while setting their own work hours.
Limit orders are another way to profit while scheduling your own hours as this trade will automatically open or close positions based on predefined values, this means you can open/close positions without doing so manually which is great for those wanting to spend less time trading and more time enjoying profits and schedule freedom.
What are the Safest Crypto Investing Platforms?
• PrimeXBT
PrimeXBT is one of the largest cryptocurrency trading and investing platforms in the world and provides some unique tools that allow crypto investors to be able to reduce the risk significantly while opening up a range of opportunities that are typically not found on other platforms.
PrimeXBT is widely considered to be one of the safest cryptocurrency trading platforms on the market in 2021, with PrimeXBT never being hacked by our will and never being hacked and protecting its users funds and dollars with a 100% success rate, and this being a largely as a result of the
bank-grade security measures that are implemented on the platform which include cold storage of digital assets with multi-signature technology and hardware security modules with rating of FIPS PUB 140-2 Level 3 or higher, with this leading to the platform never being hacked throughout its entirety of operation and this being as a result of the implementation of these powerful security features.
One of the most significant security measures implemented on PrimeXBT is the lack of hot and cold wallets as is common with many other platforms in the crypto space, and instead the replacement of this with all of the funds of users on the platform being stored on cold wallets only, with this dramatically reducing risk by cutting out a major attack vector for hackers.
• Kraken
Kraken has become a household name among crypto traders and since launching in 2011 has become popular among crypto traders, as a regulated exchange providing bank-grade security to users plus an ever-growing pool of tradable coins is now a leading exchange aimed at setting the industry standard.
This platform has a great reputation among its users and is prevalent in talks within crypto forums and communities across the web, this crypto exchange has served traders for over a decade and with their advanced security measures backed by round-the-clock monitoring have never been hacked.
Kraken is a registered and licensed exchange based out of San Francisco, California and regulated by United States law, their FDIC-regulated compliance ensures users are protected and secured which is further ensured with encryption-grade protocols that safeguard customer data and funds from hacks.
This trading platform is suitable for beginner and experienced traders as they offer what many refer to as the best customer support in the industry but also a variant platform geared for advanced traders where OTC and margin trade options are available.
Final Thoughts: Is Crypto Investing Safe?
Crypto investing is overall a safe way of being able to generate income as long as risk mitigation tools are put in place that will reduce the exposure to risk for investors whilst allowing them to enjoy the opportunities that are abundant within the cryptocurrency market for the generation of profit and wealth.
One of the most important aspects of reducing risk when investing cryptocurrencies is selecting professional crypto trading platforms to use with this in shoring that the risk of being scammed and the risk of and a range of other risks as well mitigated as much as possible.
If you would like to learn more about the three platforms that we considered to be some of the safest crypto investing platforms on the market in 2021, check out PrimeXBT and Kraken.