By Damian Okonkwo
What is Cryptocurrency trading？
Cryptocurrency trading is the buying and selling of various digital assets such as Bitcoin, Ethereum, Dogecoin, Binance Coin, etc. It is a popular investment into digital assets in the hope of making profits as the prices appreciate.
Major Cryptocurrencies traded today
The top ten most traded Cryptocurrencies today based on their market capitalization are: Bitcoin, Ethereum, Binance Coin, XRP, Cardano, Solana, Dogecoin, Polkadot, Polygon, and Tron.
What are the risks associated with cryptocurrency trading？
The fact that cryptocurrency is highly decentralized and unregulated has greatly increased the risk associated with cryptocurrency trading. We have therefore discussed these risks below.
A. No assurance for profits: There is no guarantee for profits in cryptocurrency trading today. Here the trader can either gain or lose based on the market volatility and the positions he has taken in the market.
B. Highly decentralized: The fact that cryptocurrency trading is decentralized makes it difficult to recover lost funds from scammers.
C. Unregulated: Cryptocurrency trading is not well-regulated in most countries today. This increases the tendency for some projects to rugpull without anyone questioning the developers of such projects.
D. Prone to attacks: Many crypto projects have been attacked in the past. The most recent attack on cryptocurrency is the Binance Smart Chain hack where the hackers eloped with over $100 Million worth of BNB minted on the Blockchain.
E. Loss of funds due to the crashing of projects:
Many crypto traders have lost their capital in the past due to failed crypto projects. A most recent case is the Luna crash in May 2022 which saw investors lose over $500M from the crash.
F. Not legalized: The fact that cryptocurrency is not yet legalized in many countries today has made it difficult to buy and sell cryptocurrency using banks in many countries. Traders in Nigeria today have resorted to Peer-to-Peer trading as a result of the CBN restrictions on banks in facilitating cryptocurrency trading within the country.