That is because this new and innovative industry has hit the open market very suddenly and allowed virtually anyone to get involved from the ground floor. Keep in mind that blockchain technology and the infrastructure of the crypto-market are still largely under construction. Crypto traders should proceed with caution, however; prices can move quite rapidly, which also drastically increases the risk over other markets, as well as the returns.
Getting over the tech hump
Even though the market is open to everyone, newbies can often find it quite daunting. Crypto trading can require a large amount of technical knowledge and know-how.
So the first thing that drives us crazy is the complexity: What’s a digital wallet? How do I use a private key? How much does a transaction cost? Where to get started?
Patience is key
The second thing that drives crypto traders up the wall is the time it takes to get things done. In this century we’re used to things happening instantly and we’ve come to expect this of technology. However, sending a single bitcoin can take between 10 minutes and 24 hours, depending on the time of the transaction and the fee you pay for sending it.
Other cryptocurrencies work much faster but many are willing to wait in order to get their hands on the real bitcoin. Even so, it’s still annoying!
Getting things set up can be even worse. It often takes weeks or even months to open an account at the crypto-exchanges. The average time in the industry at the moment is two to three weeks to get your documents approved.
Safety first
The third thing, which is really the first in many people’s minds, is security. There are headlines all the time about wallets and exchanges getting hacked.
Because the industry is very new, most financial regulators don’t yet have operational procedures for crypto traders. Hackers are getting more and more clever every day and in the blockchain world, all transactions are final. So if there is an incident it’s nearly impossible to get your money back.
One of the best tips I ever received was to never store your cryptos on an exchange website. This came in handy several times as the exchanges that I used were later hacked or ran into regulatory issues. Thank god I was far away when it happened.
So, with all these issues, is it even still worthwhile to trade in this market???
If you ask me, the answer is undoubtedly yes.
How to approach the crypto boom
Yes, there is risk because the industry is new and growing very fast, but the returns are potentially outstanding. Bitcoin itself rose in value by 1,000% in 2017 while the entire industry grew more than 3,390%.
As with any investment, you never want to invest more than you can afford to lose. And if you’re considering investing in general, the best thing to do is to build yourself a portfolio of many different cryptos, stocks, commodities, or anything else that you feel will rise in value over time.
Try before you buy
On eToro, we make this process very simple. It won’t take more than a few minutes in the demo account to figure out how to open and close a trade or how to copy other people who have more experience. Opening a demo account is a simple process, which is very quick.
Once you’re ready to invest real money, you can deposit money directly using a credit card or a paypal account in minutes flat. Since eToro is a platform to manage all your investments, you won’t need to worry about storing cryptos in a digital wallet and you can rely on our experience and expertise to ensure everything is kept safe and secure.
Please feel free to open a virtual account now and try us out. We’re also a social network, so if you have any questions, you can always ask any of our millions of registered users or tag me directly (@MatiGreenspan) and I’ll be glad to help out.
Hope to see you around.
Disclaimer: Your capital is at risk. Past performance does not indicate future results. This is not investment advice. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.
Images courtesy of Shutterstock
