Reviewing The Risks: What Can Intervene Traders?

Jun 30, 2022

Despite the fact that cryptocurrency services are considered among the most secure compared to traditional bank transfers or electronic wallets, there are still a lot of risks. All of them can spoil the experience of handling digital money for any user.

That is why, before engaging in crypto trading, you should study in detail all the potential risks — this will allow you to approach the matter with maximum responsibility and minimize the possibility of losing funds.

Hacker Attacks

Cyber-attacks are one of the biggest problems for customers who store digital money. The most striking examples of hacker assaults:

  1. In 2016, due to a bug in the code, hackers gained unauthorized access to the digital wallets of members of the DAO hedge fund and stole more than $150 million.
  2. Hackers bypassed the security system and changed the methods of user verification on the well-known Bitfinex — then they stole $ 70 million.

Therefore, experts recommend not neglecting the basic security rules, using only reliable platforms like, and, of course, taking care of having secure wallets to store your assets. By the way, it`s better to choose cold ones that work without connecting to the Internet.

Imperfect Regulation

Unfortunately, not all countries are ready to consider cryptocurrencies as real money and introduce some effective methods of regulating this area. Such instability leads to the fact that the investor insurance system is either critically imperfect or does not exist. That is, customers often cannot even claim damages, although some exchanges operate as official virtual banks. At the moment, working schemes for insuring cryptocurrency assets are under active development.

Possibility of Bankruptcy

The third dangerous risk for traders with any experience can be considered the possibility of bankruptcy and the closure of exchanges. According to statistics, over the past 5 years, more than 45% of realtors have closed — and among them were quite large brands that were considered promising. However, Richard Johnson, vice president of Greenwich Associates, states that “such a shocking figure is the norm because all crypto technology is a fairly new area.” The failure rate of exchanges is likely to decrease over time, but all customers should be aware of the risks.

But why do stock exchanges go bankrupt at all? Erik Voorhees, the founder of the ShapeShift, answered this question: “The main problem is profitability, it is simply difficult for exchanges to stay afloat due to insufficient turnover of funds.” That is, if the platform didn`t take care of a good commission from each transaction, then there is a possibility that sooner or later it will go bankrupt, as it will not be able to maintain the functioning of its service.

Final Thoughts

Of course, additionally, to these three risks, there`re also other potential dangers, such as a possible collapse of the digital money market, which analysts constantly scare customers or general cryptocurrency volatility. However, traders can avoid these problems by relying on systematic scope analysis and risk prevention rather than just making deals intuitively.


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