Risks and challenges related with cryptocurrencies investment

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There is always a risk associated with any form of investment scheme we choose and cryptocurrencies is no different. Indeed cryptocurrencies has the potential of making one life changing gains in a very short time and at the same time it also poses significant risk that's vital for we to be aware of before choosing to invest in it. In my post today it will be centered on the risks that is particularly associated with cryptocurrencies investment.

Certain Risks That Comes With Investing In Cryptocurrencies

One of the risk which comes with investing in cryptocurrencies has to do with the the very core nature of cryptocurrencies. From the very first crypto itself bitcoin is a highly volatile asset class, due to its volatile nature and the rapidity with which it experiences price fluctuations it makes it to be a risky asset to invest in. Now the volatile nature of cryptocurrencies goes both ways, yes it could help one gain massive profit in short period of time at the same time subject one to an enormous loss in a little time frame as well, it doesn't offer the stability that most tradtional asset class offers, so for this reason cryptocurrencies is known to be a risky asset. So the volatile nature of cryptocurrencies is one of the risk that comes with investing in it.

Also the other challenge that's commonly experienced here which poses a serious issue for those looking to invest in cryptocurrencies is the fact that while cryptocurrencies has the promise of quick gains it does have a regulatory uncertainty. Cryptocurrencies regulations vary from country to country and there isn't a clear established regulations guiding the use of cryptocurrencies that's widely accepted globally and different people have their own views of it and as such make up the rules based on this personal views and cryptocurrencies thus lacks proper regulation like the tradtional asset and for this reason it makes certain investors to stay clear of cryptocurrencies due to its uncertain regulatory environment as there is no guarantee or stability due to the fact it isn't properly regulated so this is also one of the risk or challenges that comes from investing in cryptocurrencies.

Also there is a certain risk that comes with investing in cryptocurrencies which often involves the fact that here due to lack of regulations and other factors there is no guarantee for protection of users or customers, for instance in our local bank certain annoymous transactions which are fishy could be traced and possibly even reversed if found to be dubious and also we can report certain activities if we notice irregularities in our account or if someone hacks our account and move the money to another account such transactions could be traced and the individual who perpetrated such will be made to face the law but this kind of consumer protection is lacking in cryptocurrencies. When transactions are made it can't be everly reversed more or less tracing the individual responsible for this act, in cases of fraud there is very little or nothing that could be done our funds are simply gone, so when people know that there isn't any consumers protection then there is a chance of them staying off from investing in this market.

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There isn't a market as easily manipulated as the cryptocurrency market, this maybe the most manipulated market ever in the digital financial market and we witnessed that first hand during the 2021 bull run when Elon muck showed this and it's also easily influence by many factors as well but by social media influencers so there is often an experience of pump-and-dump that certainly isn't what an investor wants, I mean you wouldn't want to enter an investment scheme thats subject to pump-and-dump I mean that's almost like ponzi scheme so for this reason many shy off from it, and this is really a serious challenge and risk that comes with cryptocurrencies investment as there won't be guaranteed stability to their investment.

Another challenge that comes with this or risk thats associated with cryptocurrencies investment is the fact that this is a particularly new asset class and as such there isn't much trust yet from the mass and it's still a new technogy envolving adding with the regulatory uncertainty surrounding it, this makes it much harder for it to gain wider and mass acceptance and for this reason some may steer away from the cryptocurrencies market.

Conclusion

After clearly highlighting the risk that comes with investing in cryptocurrencies it's good that one is enlighten about this in other to make an informed investment decision because while cryptocurrencies investment has the potential of generating huge and massive gains it could also lead to substantial loss of money, hence it would be wise to be aware of both the benefits and risk associated with cryptocurrencies investment that's why all looking for investment opportunities should always do well to carry out their own research before deciding what to invest their money in to avoid financial heart break.