Is Trading Cryptocurrencies Worth It?
A Look at How Safe and Profitable the Crypto Markets Really Are
Before diving in to the cryptocurrency arena, it’s a good idea to get to grips with the basics. This way you can make an informed decision on whether or not to entrust your capital to the digital currency markets. We’ll be looking at the various types of crypto trading and whether it presents a safe, legal and profitable investment opportunity. We’ll be asking the critical question -is trading cryptocurrency worth it, particularly for those who are new to the crypto world?
Before we go any further, let’s start with a brief breakdown of the fundamentals:
So what is cryptocurrency and how is it different from traditional currencies?
Cryptocurrency, also referred to as digital currency, is a virtual, electronic monetary system. All transactions are executed using highly advanced cryptography and are monitored by means of a global peer-to-peer network that allows currency transfers to be made securely and transparently from anywhere in the world.
One of the most notable differences between cryptocurrency and traditional, fiat currencies is that the crypto arena is totally decentralized. There is no central server, no single controlling authority and no governmental oversight or interference of any kind.
In addition, digital currencies, such as Bitcoin, Etherium and others can be transferred virtually instantaneously, without any of the bureaucratic delays, red tape or costly service fees that are incurred when using the global banking system.
Is trading cryptocurrency legal?
The short answer is yes, in most of the developed world.
Trading digital currencies is perfectly legal, in Canada, Japan, the United States, and the United Kingdom as well as across Europe. However, in China, digital currency trading is heavily restricted and India has recently implemented laws preventing banks from dealing Bitcoin.
Criminals have been known to take advantage of the fact that cryptocurrency transactions can be made anonymously, as an address in the network does not have to correlate to a real world identity. Understandably, this has given cryptocurrency trading a less than sterling reputation. Yet, the rapidly growing crypto arena is gaining greater power and legitimacy as regulation catches up with a dynamic and evolving digital reality. This is clearly evidenced by the fact that governments are starting to tax crypto proceeds so they too can get a piece of this large, lucrative pie.
Is trading cryptocurrency safe?
As we mentioned earlier, all cryptocurrency transactions are monitored by a peer-to-peer network that is secured by means of powerful cryptography.
A highly advanced, public key cryptography system ensures that cryptocurrency is securely encrypted and stored in the blockchain. To make a transaction, a private key, which is only accessible to the holder, is used to authorize the currency transfer, thereby effectively safeguarding against fraud.
Undoubtedly, the crypto sphere has its fair share of scammers and hackers, but it also offers unparalleled opportunities and there are plenty of ways in which you can take steps to protect yourself, so you can enjoy a safe trading experience and guarantee the security of your funds.
Cryptocurrencies are traded on exchanges, some of which are more reputable and reliable than others. Select your exchange carefully, taking into account its online reputation, with services like Trustpilot and social channels like Reddit and Twitter.
To be sure you are dealing with a trusted, transparent and secure cryptocurrency exchange, choose one that adheres to the strictest possible regulatory requirements, which rather than allowing for anonymity, requires you to verify your identity. Keep your distance from any exchange that makes no request for Know Your Client (KYC)/ Anti-money Laundering (AML) documentation. While this may take a little time to provide and have confirmed it makes for a far, far safer trading environment.
Another even safer option, is crypto-arbitrage. This involves buying a cryptocurrency on one exchange and then selling it for a higher price on another exchange, making your profit from the temporary difference in price. This is considered to be a low risk form of investing, particularly if you use an automated platform that can work around the clock, scanning multiple exchanges simultaneously to find the lowest buy-price and the highest sell-price and react instantly to the market.
Here too, selecting a fully EU licensed and regulated platform is critical. One example is ArbiSmart, which also offers a great, in-depth explanation on its website for why regulation is so important for ensuring the safety of your cryptocurrency investment.
Alright, so we’ve established that in large parts of the world crypto trading is legal and transactions can be made safely. But we need to work out whether we can make money doing it before we can provide a definitive answer to the question: “Is trading cryptocurrency worth it?”
Is trading cryptocurrency profitable?
Without a doubt, digital currency investment is gaining ground, growing in popularity and legitimacy. Smart, fast and secure, cryptocurrencies are taking center stage in the evolving digital economy.
But, is trading cryptocurrency profitable for regular people who don’t have hundreds of thousands to invest in the markets?
Well, it certainly can be.
One of the core characteristics of the crypto markets is that they are open access. Anyone with an internet connection can trade without huge capital resources or years of prior investment experience. There are plenty of online exchanges to choose from and hundreds of different cryptocurrencies to be traded.
For better or worse, the crypto markets are highly volatile. Rapid price shifts present greater risk but also more lucrative opportunities for profiting from market movements.
Many are drawn to cryptocurrencies as a great way to diversify and strengthen their trading, portfolios, while mitigating their risk. With any investment, there is an element of unpredictability, as no one can predict the future with absolute certainty. However, the cryptocurrency market is currently worth over 237 billion dollars and that number is increasing at a rapid pace each year.
The technology behind cryptocurrencies is game-changing and as blockchain becomes a secure mainstream backbone for transactions and data sharing in all types of industries, with the tech being used for the purchase and sale of every kind of financial product, the opportunities to make money trading cryptocurrency are endless.
The crypto world is steadily gaining momentum and recognition, but if you wish to start trading cryptocurrency and exploiting the lucrative opportunities this market offers then you have to be smart about it.
Firstly, explore the various cryptocurrencies, each of which is valued differently and has its own unique benefits and characteristics. There are hundreds to choose from but it makes sense to zero in on a few, watch their market behavior and learn a bit about their price history.
Next, make sure you are using a trustworthy platform and finally, as with any form of investing, never trade more than you can afford to lose.
So, finally, we come back to our original question: Is trading cryptocurrency worth it?
As we’ve seen, crypto trading offers speed, security and transparency. It is the future for financial transactions and is at the heart of a technological revolution that is rapidly changing the way the world does business. Put simply, the cryptocurrency markets are most definitely worth the investment.