3 Reasons Why the Crypto World is Harder than You Think

The crypto world is a complex and ever-evolving landscape, which can be overwhelming for those just starting. While the potential for rewards is high, there are also a lot of challenges that come with entering the crypto world. This article will discuss three reasons why the crypto world is much harder than many think. From understanding the technology to dealing with market volatility, these reasons will help you better understand the complexities of the crypto world and why it’s essential to research before diving in.

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1) The Volatility of the Market

The crypto world is a challenging and complex environment to navigate. With the ever-changing market dynamics, traders must stay on their toes to make informed decisions. One of the biggest challenges of this market is its extreme volatility.

Incredibly Volatile

Cryptocurrency markets are incredibly volatile and can experience drastic changes in price over short periods. For example, Ethereum’s price dropped from $365 to $220 in a single day in November 2018. These huge swings in price can make trading very difficult as traders need to be able to assess the risk versus reward of any potential investment. This can be especially tricky for novice traders who may not know the potential risks involved.

Another challenge caused by market volatility is that it can be difficult to accurately predict which currencies will be successful long-term investments. Although some success stories exist in cryptocurrency, most digital assets are still highly speculative and risky investments. Experienced traders must be able to analyze the data and make educated guesses as to which assets will be worth investing in and which may be more prone to fluctuations in value.

Incredibly Dynamic

It is important to remember that the crypto world is an incredibly dynamic and unpredictable space. As such, traders must be prepared for anything and always be aware of the risks associated with their investments. By staying informed and making educated decisions, traders can better prepare themselves for the market’s volatility.

2) The Lack of Regulation

The lack of regulation in the crypto world is one of the most significant factors making it more complicated than you think. Without any central authority or governing body overseeing the market, there’s a lot of potential for bad actors to take advantage of unsuspecting investors. There have been countless crypto scams, hacks, and other unethical activities that have left many investors out of pocket and without recourse for recovering their losses.

Decentralized Nature

The decentralized nature of crypto assets makes them more vulnerable to manipulation by those with more outstanding capital. Market manipulation is a common problem in traditional markets. While it’s illegal in most places, it’s still difficult to detect and even more challenging to punish when it occurs in the crypto world. This lack of regulation means terrible actors can easily take advantage of smaller investors and negatively impact the market.

The crypto market also lacks uniformity regarding regulations across different countries. In some parts of the world, crypto assets are entirely outlawed, while in others, they may be seen as a legitimate form of payment or investment. The differing regulations from country to country can make it difficult for investors to adequately know how to trade and protect themselves from fraud.

Highly Speculative

Finally, the crypto world is highly speculative and volatile. With so many unknowns about the technology and its potential, predicting the future value of a particular asset can be incredibly difficult. Cryptocurrencies can experience drastic changes in price over a short period of time, leaving investors with potentially huge losses if they don’t correctly time their trades. Investing in the crypto world can be risky and unpredictable, and this fact alone makes it much harder than most people think.

3) The Lack of Understanding from the General Public

Cryptocurrency and blockchain technology is quickly becoming a popular topic among tech circles. Yet, for the most part, the general public still lacks a fundamental understanding of the technology. Unfortunately, this lack of understanding makes the crypto world more difficult than it needs to be. Here are three key reasons why crypto is harder than you think.

1. Limited Knowledge

Most people don’t understand cryptocurrency or blockchain technology, let alone how it works. Without a basic knowledge of the technology, it’s tough to make informed decisions about which digital assets to invest in or when to trade them. This lack of knowledge puts many people at a disadvantage when understanding the intricacies of the crypto world.

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2. Security Concerns

Any government agency does not regulate cryptocurrencies, and has been deemed volatile investments by many. This can make it difficult for inexperienced investors to enter the market. Additionally, the lack of regulation means that security threats such as hacks, scams, and fraudulent ICOs are not uncommon. Investors must be aware of these risks before investing in any digital asset.

3. Volatility

One of the defining characteristics of cryptocurrency is its extreme volatility. Price swings of 10-30% within a few hours are not unheard of in the crypto markets, and this can make trading a problematic endeavor. Even experienced traders struggle to accurately predict the market’s direction and take advantage of price movements.

In summary, the crypto world is indeed more complicated than many expect. Without basic knowledge and understanding of how it works, combined with security concerns and high volatility, investors must be aware of these challenges before entering the market.