Blockchain technology keeps gaining momentum around the globe — from fintech and land administration to government management and NFTs. However, the volatility and lack of stability and predictability on the crypto market prevent the masses from swiftly and firmly believing in blockchain technology. Unfortunately, it is still quite often associated with scams or something detached from reality (that’s one of the reasons why crypto and fiat are still not married today). So, what are the blockchain risks and risks associated with crypto in particular? And, most importantly, how to avoid or at least mitigate blockchain risks while also enjoying the technology itself?
In its essence, blockchain is a technology that is inherently quite logical in the operation. So basically, there are no risks in using the technology itself. However, from the general point of view, there are a few shortcomings associated with blockchain:
Yes, it really is quite possible to get hefty pockets by investing in cryptocurrency — Bitcoin’s 3x price surge in just a year and Ethereum’s recent 4x rise being prominent examples. However, crypto trading can also be detrimental to your purse — you can lose a lot if you are not lucky or unless you invest wisely. As we have already said, the crypto market is quite volatile and thus comes with a bunch of risks while also enabling vast rewards.
Before we start, it is vital to differentiate “crypto” and “blockchain” domains despite they may seem identical if you’re not a blockchain enthusiast or a tech-savvy person. Risks of making a mistake in the integration process when you build a new product may cost much more than you may lose as an individual while trading crypto but you will have much more time to consider all the possible pros and cons. That being said, we encourage you to check our blog for the Blockchain tag because a couple of articles may help you to educate yourself in this area quickly and with no stress.
First of all, you have to always learn as much as possible about the domain you want to deal with — be it blockchain, crypto, or whatever. Ignorance is definitely not bliss in that matter.
Secondly, scam is omnipresent, so you should always keep your eyes peeled and dig into the details of the projects you want to engage in. Also, be extra cautious with very young companies (especially those launched a few days or weeks ago — while those could be real and good, a lot of them tend to be deceitful).
Thirdly, work with proven services and tools only and remember to always turn on your inner critic — especially when you get extraordinarily profitable offers.
At Idealogic, we have been working with crypto startups for a long time. However, we are not biased by that fact and do understand that young companies in that domain can act in a bad faith — or simply be unable to become successful, even if they have every desire for this. There comes our fourth piece of advice: don’t invest or engage in what is either strange or completely unknown for you — or both. If we are talking about an investment in some crypto project, it’s always better to know the founder in person and to be confident in his plans and intentions.
Every second person today seems to be a crypto trader, but not everyone understands how the market works and what are the basic rules. We’ve identified the most important pieces of advice that will help you save both your time and money — and also your nerves.
Although it is not yet evident to everyone, blockchain technology will most likely have a very promising future with lots of useful applications for all of us. Meanwhile, it’s essential to be realistic when it comes to crypto and blockchain risks or shortcomings and take every measure you can to ensure smooth usage of the technology. The most important takeouts from this article should be: the more you know, the better, and your inner critic is your best friend.