The Major Risks in Crypto Business

[Wawa2013]

The major risk in the crypto world that worries me the most is a lot of scams, I have very often found newbies creating threads in this forum saying
that they were victims of scam. Actually the problem is in ourselves why we become victims of scam, from the results of the research that I have
done. Most of the people who are victims of scam, because they cannot control their greed, want a profit in a short time. And also lazy to do research
when deciding to invest, which results in investing in scam projects.

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[Willitivity]

I will be delivering a lecture or an address by weekend on a topic which would be part of the Crypto book am working on. The topic i will be teaching is "Crypto Risks: How to Minimize risks in Crypto business."

I would want to focus on trading and Investing. But, i want to know what you think on the following;

1. what are the major crypto risks that one should know and avoid by all means.

2. How do we tackle these risks or are there way to tackle the risk?

We can use btc trading and investing as a case study.

I wanted to give a more general outlook of the risks in crypto that people usually face but since you're concentrating on trading on investing, I will do the same. For investing, the major risk is investing in a scam or in a project that has no headway. I don't think one is worse than the other but issues like that can be easily resolved by putting more time in researching projects before jumping in with real money. For trading, I'll use Bitcoin as a case study. Trading is exhaustive skill to learn and the greatest risk with trading bitcoin is that 95% of traders buy tops and are the first to line uo orders to sell shorts too. It can be solved by taking time to learn how trading works even at the fundamental level.

[DarkDays]

Especially when talking about cryptocurrencies in general and not specifically with bitcoin, the "diversification" misunderstanding. People tend to think that putting your money solely on bitcoin is "risky", so what they do is "diversify" to other cryptocurrencies(and mostly shitcoins) lol. True diversification is allocating funds to other assets classes like stocks, real estate, and etc.

I take you up on that @mk4. True diversification is across the financial field not just the crypto space. I do disagree though that this doesn't mean you cant diversify in crypto, sure you can - just by looking at alts that are not completely dead with a fake community. Going for the next 20 alts would be a nice diversified portfolio or at least some diversification 

[Lauren Smith]

Never invest what you can't afford to lose meaning if losing it will reduce your quality of life do not invest that much invest less.

Do not take out loads you might not be able to pay back if things go wrong this means not only do you lose money on the investment but you are now paying interest on a loan you can't afford to pay back anytime soon, you will become desperate and we do silly things when we are desperate.

Strike when the iron is hot. If the value of your coin has grown to the point where the return in a large amount does not keep holding in case it crashes. Sell as many coins as you can in order to pay yourself what you feel you deserve and then hold onto the rest. Meaning gets your ROI and a small profit at least.

Never sell too early especially during dumps, if it is a coin you believe in this is the time to buy not sell.

Never trade while hungry/thirst/ under emotion strain or distress /tired/ drunk / high / etc. You need a level head when you trade. Rather sleep if you are tired. You might lose out on a good deal but what if you so tired you make a huge and costly error? Better to be of sound mind at the time of trading.

Always withdraw your coins from your exchange account asap. An exchange is not a wallet it is not there to protect or store your coins it is there to trade. It is a market. Withdraw when you re done.

Set up a pin code when trading that is asked before each trade. This prevents mistakes.

Other than that there are the other things the others have already been mentioned. These are just some of my personal ideas.

[seoincorporation]

I think the biggest risk is volatility, and i say this because if the coin goes down 40% that means we already lose 40% of our money for the simple fact of being a holder.

People who start a crypto business should consider this risk before accepting bitcoins as an official payment for their business.

[Twinkledoe]

Especially when talking about cryptocurrencies in general and not specifically with bitcoin, the "diversification" misunderstanding. People tend to think that putting your money solely on bitcoin is "risky", so what they do is "diversify" to other cryptocurrencies(and mostly shitcoins) lol. True diversification is allocating funds to other assets classes like stocks, real estate, and etc.

I take you up on that @mk4. True diversification is across the financial field not just the crypto space. I do disagree though that this doesn't mean you cant diversify in crypto, sure you can - just by looking at alts that are not completely dead with a fake community. Going for the next 20 alts would be a nice diversified portfolio or at least some diversification  

Because not all alts are worth to take risk with. Many of them are really crap. So yeah, diversification goes beyond here. Why not go into real estate if you have the money?  But for most small time investors, they opt to invest in other alts because they are hoping to increase many fold of their investments, they should be very careful in such thought. Most failed in crypto investments, because let us admit, there are so many crap projects that only deceived these investors for get-rich-quick scheme that never materialized.

[Rengga Jati]

I will be delivering a lecture or an address by weekend on a topic which would be part of the Crypto book am working on. The topic i will be teaching is "Crypto Risks: How to Minimize risks in Crypto business."

I am a little confused by this, you want to give a lecture at the end of the week and you are part of the Crypto book am working on.
isn't it strange, if you already want to do this, you shouldn't have to ask this question here, because you are already a more expert? If you also want to convey this here, you should write your version first, what your thoughts are, then the members here will provide their input or ideas.

Well, basically for me, the major risks of crypto:
- Scammers
- Losing money
- Stressful
- Unstable emotion
- Hackers
- Liquidity
- Hype and FOMO traps
- and many others.
Well, actually they're very common risks and will happen if we don't know crypto.
Moreover bout the last, nowadays, many people are trapped in the hype and also fomo that make them lose much money and then go away from crypto by the mad emotion. They did it because actually, they entered the crypto world without learning at first.

remember, Crypto is something promising, but it can also destroy us quickly.

I think that reading and earning is also the key. We can read much information from this forum, other websites, and also trusted reputable YouTube so that we can know the basic risks of crypto. It is not only about profits but also about the risks. The risk is as high as the profits. Better not only following hype or FOMO, but dyor also is better and crosses the information with others. Never also interested in a kind of very promising project with high profits. Ibeaus many scammers also utilize this term, with very high-profit investemnts.

[Silberman]

I will be delivering a lecture or an address by weekend on a topic which would be part of the Crypto book am working on. The topic i will be teaching is "Crypto Risks: How to Minimize risks in Crypto business."

I would want to focus on trading and Investing. But, i want to know what you think on the following;

1. what are the major crypto risks that one should know and avoid by all means.

2. How do we tackle these risks or are there way to tackle the risk?

We can use btc trading and investing as a case study.

If you are going to use trading and investing as a case study then I think you need to make a very heavy emphasis on scams, people are very gullible and they believe almost everything they read, this is bad enough with social media but when your money is at stake this is terrible, you need to teach people that even something as low as 1% per day is practically impossible in this market and you need to teach them that one of the biggest risks is to try to become a trader or investor without any knowledge about those subjects.

[zanezane]

I would say that one of the major risks of crypto is its inherent volatility, we don't necessarily have to avoid, in fact we have to embrace it because this is a good thing for bitcoin and to someone who wants to buy bitcoin at lower price, with a stable price, you won't be able to get a big profit margin in a long term hodling. I consider volatility as a risk for crypto businesses for the reason that if an average person were to engage or planning to engage in a transaction with the business and they see that they were paying the same amount but at the different rate which could be misinterpreted as something bad. We don't necessarily need to tackle this risk, as I have said earlier, embrace it because there are opportunities when volatility is present.

[Xinarae*]

I think the main risks of crypto trading are that traders get very frustrated when the currency price goes down a lot. Being overly sensitive can damage your business this is especially important for short term traders the risk of loss in their case affects them to the extent that it disrupts their planning and strategy it is important to control emotions after a failed business. One of the main ways for traders to lose money is to reduce discipline and chase businesses with unrealistic losses if so you can control the market and get your money's worth right before your eyes.

[skpanchal]

There have been many reports about the computational complexity and energy consumption of bitcoin mining, as one example of some of the technological limitations of cryptocurrencies. This computational complexity may also work in the inverse and pose potential risks to the asset class under the premise that complex systems fail in complex ways

[sunsilk]

1. The major risk as for investing in bitcoin would be its volatility. When people hear success stories of people who have profit in bitcoin ignores this fact.

2. There is no way to avoid volatility for bitcoin but you can reduce the risk that you will take through buying ans holding it. Desiring to day trade will put you more into risk.

Indeed, right? But, I actually love how the volatility works for us, it helps more than what we think. Volatility is not a thing we worried about, what we worried more about is to miss this opporunity because there is no coming back. We might not able to see 1BTC= $10k or $20k again in the future.

People might afraid of this, maybe they should afraid if there is no movement on their investment. Because the truth is that, there is money in this kind of trend, up and down, it gonna be easy to manage if we are not emotionally affected to it.

We're already used to volatility and we're living on it. It's been part of our lives and if there's a sudden plummet or rise, we're already anticipating it because we know that it's how it should be.

The opportunity? it's always been there but usually many are missing it. Because they can't figure out if they should buy if it's already the bottom or they should be patient and wait longer before they commit to buy.

[GeorgeJohn]

1. what are the major crypto risks that one should know and avoid by all means.

2. How do we tackle these risks or are there way to tackle the risk?

Risk:

1.Volatile
2.Not regulated
3.Hacks/Scams
4.Fomo/Fud


Tackle/handling it out:

1. Read up the basics on how crypto work.
2. Common sense
3. Good emotion handling
4. Good risk management

Reading up is only solution to everyone security and also been security conscious, he can equally try to avoid other things via article and personal decision ,and if you don't have the basic knowledge of hacker's and scammers readingup textbooks will help and also using common sense is the highest security I can advice someone to follow, because you might think the best is the information obtained here, while personal initiative can be a highest guild or protector in order to secure cryptocurrency privately.

[ttcsalam]

I can say from my personal experience that throughout the last year there have been many good times for the Crypto world.every Crypto related man take some profit who done bounty or who Related with Crypto Business.But last month we see a big correction.From that we have to learn a Strategy.Where we can make any decision or invest at any moment.

[lifeforcepools]

First of all, you need to understand how crypto and blockchain work, then get some experience in trading and of course prepare yourself for the fact that everyone is trying to deceive you.

[isaac_clarke22]

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Hackers are situational. Just make sure you're not hodling crypto or any forms of coin in an online wallet for obvious reasons.
"If you don't have your private key, it isn't your money, profit, coin, etc".
One would simply freeze your wallet and there's nothing you can do about it. That's even aside from hackers. That's regulation.

[xceltoken_plus]

The risks of trading cryptocurrencies are mainly related to its volatility. They are high-risk and speculative, and it is important that you understand the risks before you start trading. They are volatile: unexpected changes in market sentiment can lead to sharp and sudden moves in price.


Cryptocurrency is digital money. That means there's no physical coin or bill — it's all online. You can transfer cryptocurrency to someone online without a go-between, like a bank. Bitcoin and Ether are well-known cryptocurrencies, but new cryptocurrencies continue to be created.


The biggest risks of investing in bitcoin in 2021:
-Bitcoin is one of the most volatile investments you could make.
-Bitcoin has a bit of an identity crisis.
-Bitcoin is not regulated by any central bank or nation.
-Bitcoin is widely used for illegal activity.

[doctor877]

i believe you have your own points already, this is just an addition. bitcoin volatility is one of the risks trading and investing posses. you can invest or trade and have your money halfed for a long time which without patience you can decide to sell at loss. also having the money to bear loses.

[hv_]

Understanding the very basics of finacial product definitions &  (settlement) systems  + legal & compliance impacts

what a risk, just to follow twitter / social media shills (mostly : number go up)

[Wenbing]

In my opinion, the most fatal risk is when you want to invest but you don't know what crypto you are investing in. Brought on by Fomo and starting off on the wrong foot. and to overcome it you only need to learn before falling already.

wait, are you looking for answers to the questions you really need. do you need a reference for the book being compiled?

Sure, i will surely give credit by referencing appropriately the sources of my information. I will appreciate more if you have further recommendation regarding materials and other helpful resources.

The major risk in investing and trading in crypto that a beginner may encounter is the volatility of the bitcoin on which no one can assure profit in terms of both things, the second risk that we may encounter as well is choosing or finding a legit crypto exchange, there is already a lot of fake exchange that a beginner may encounter upon exploring the crypto world so you better choose the overrated and well-known exchange to assure that your money is safe. Would be better if you also include these things in your lecture:
1. Basic introduction about cryptocurrency.
2. Decentralization

Anyway, Goodluck with your lecture, wish you success.

Thanks so much for the advise. I will surely give a background explanation of cryptocurrency and decentralisation before diving deep into the crux of the matter.

[moderator's note: consecutive posts merged]