What you need to know about cryptocurrencies before investing
Some basic things you need to know
If you are about to explore the world of cryptocurrencies, there are a few things you should know. Cryptocurrencies let you exchange money in a different way than with usual banks. Cryptocurrency wallets should be treated with the same care as your regular wallet, or even more in some cases!
Securing your cryptowallet
Like in real life, your wallet must be secured. Generally, cryptocurrencies make it possible to transfer value anywhere in a very easy way and it allows you to be in control of your money. Such great features also come with great security risks. At the same time, cryptocurrencies can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money.
Cryptocurrency prices are often volatile
The price of a cyrptocurrency can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets. Consequently, keeping all your savings in cryptocurrencies is not a really good idea. Cryptocurrencies should be seen like a high risk asset, and you should never store money that you cannot afford to lose with cryptocurrencies.
Cryptocurrency payments are generally irreversible
Any transaction issued with cryptocurrencies generally cannot be reversed, they can only be refunded by the person receiving the funds. That means you should take care to do business with people and organizations you know and trust, or who have an established reputation. For their part, businesses need to keep control of the payment requests they are displaying to their customers. Cryptocurrencies wallets can detect typos and usually won’t let you send money to an invalid address by mistake. Additional services might exist in the future to provide more choice and protection for the consumer.
Most of the cryptocurrencies are not anonymous
Some effort is required to protect your privacy with cryptocurrencies. All crypto-transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any crypto-address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why crypto-addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy.
Unconfirmed transactions aren’t secure
Transactions don’t start out as irreversible. Instead, they get a confirmationscore that indicates how hard it is to reverse them. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer.
Now you know more about cryptocurrencies!