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Bitcoin is not crypto
The risk of fraud and scams
Volatility of the market
Cryptocurrency has been a buzzword for the past few years, with more and more people looking to invest in digital currencies. For example, the hype and craze of 2021 saw NFTs (Non-Fungible Tokens) reach peak mania phase as major celebrities joined the FOMO (Fear Of Missing Out).
While there's no doubt that Bitcoin has huge potential, there are also some important safety considerations to keep in mind.
Here are three important things you should be careful of when thinking of investing in cryptocurrency.
Bitcoin is not crypto
One of the biggest misconceptions about cryptocurrency is that Bitcoin and cryptocurrency are the same thing. In reality, Bitcoin are crypto are two completely different things. While Bitcoin is the most well-known and widely used cryptocurrency, it's not the only one, and it's important to understand the differences between Bitcoin and other cryptocurrencies.
In our course, we make a habit of separating Bitcoin from the rest of cryptocurrency. In addition, we highlight the significance of Bitcoin and explain the risks you enter when looking at the rest of crypto.
Bitcoin has rules and no rulers
Bitcoin is a completely decentralised, censorship-resistant technology that provides many solutions to real-world problems. Bitcoin has no rules and no rulers, and most notably, no CEO. On the other hand, almost all cryptos have forms of centralisation, rulers and CEOs. They run more like businesses with the core function being self-interest and profits from within. Therefore, the two are not the same.
The risk of fraud and scams
One of the biggest risks when investing in cryptocurrency is the potential for fraud and scams. Because the cryptocurrency market is largely unregulated, it's easy for bad actors to take advantage of investors.
Some of the most common scams in the cryptocurrency world include Ponzi schemes, fake ICOs (Initial Coin Offerings), and fake exchanges. Unfortunately, this is all too common.
For instance, many new projects ride the wave of Bitcoin and even claim to be better than it. You may hear things such as "it's quicker, faster, better" than Bitcoin and the chances are they are nothing alike. The reality is that this project is likely highly centralised and offering false promises.
That said, it is hard to spot certain scams due to heavy marketing and paid influencers promoting the project. As a result, this becomes a rinse and repeat for fraudsters in the industry as they know they can get away with it without any serious regulation.
Volatility of the market
The third important thing to be careful of when investing in cryptocurrency is the volatility of the market. The price of cryptocurrencies can fluctuate rapidly and unpredictably, making it a risky investment for those who are not prepared for the ups and downs of the market.
It's important to understand the factors that can influence the price of Bitcoin and cryptocurrency, such as regulatory changes, technological advancements, and market sentiment, so that you can make informed decisions.
It's also important to note that the volatility of cryptocurrencies is highly dependent on what Bitcoin does. When Bitcoin's price goes up, so does the rest of the cryptos. Not the other way round.
The entire industry, including Bitcoin, still remains speculative because it is still very new in the grand scheme of things. That said, the speculative nature of Bitcoin compared to the rest of crypto is night and day. Circling back to the first point, it's crucial you are aware that Bitcoin and crypto are two entirely different things and therefore serve their own purposes.
In conclusion, investing in Bitcoin and cryptocurrency can be a rewarding experience, but it's important to be aware of the potential risks involved. By understanding that Bitcoin is not cryptocurrency, being cautious of fraud and scams, and being aware of the volatility of the market, you can make informed decisions and protect yourself when looking at investing in cryptocurrency.
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