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What You Must Know Before Investing

· 2 min read

What Are the Risks in Cryptocurrency?​

Before investing in cryptocurrency, you must clearly understand the risks involved.
Crypto offers independence and freedom, but it also puts full responsibility on the user.

1. Storage Risk​

Unlike traditional banking, crypto wallets put you in full control of your funds.
But with this control comes risk:

  • Lose your wallet password or private keys → you lose access permanently.
  • Enter your mnemonic phrase into a phishing site → your funds are gone.
  • Get scammed → there is no hotline or support team to reverse the transaction.

📌 That’s why we dedicate an entire module to security:

  • Safe storage methods
  • Recommended wallets
  • Protection tools

2. Buying the Wrong Cryptocurrencies​

The risk isn’t just price drops — it’s total devaluation.

  • Many tokens are worthless projects promoted by influencers or YouTubers.
  • About 98% of media “reviews” are paid promotions designed to pump hype.
  • Many promoted projects are outright scams.

📌 Rule: Never buy based solely on YouTube, Telegram, or social media posts.

  • Always verify from multiple sources.
  • Do your own research (DYOR) before investing.

3. Stablecoin Risks​

Even stablecoins are not risk-free.

  • Each uses mechanisms to stay pegged at $1.
  • But de-pegging (losing that peg) can and does happen.
  • Always factor in this possibility when holding stablecoins.

4. Smart Contract Hacks​

Smart contracts power DeFi, but they also carry technical risk:

  • Developers can make mistakes → leaving vulnerabilities.
  • Hackers exploit these vulnerabilities → funds can be stolen.
  • This applies to every smart contract.

📌 How to reduce risk:

  • Use time-tested protocols.
  • Check for audits by reputable firms.

⚠️ Important: An audit is not a guarantee.

  • Even scam projects can pay for audits.
  • Treat audits as one criterion, not proof of safety.

5. The Biggest Risk: Speculation​

Speculation is the fastest way to lose money.

  • Leveraged trading
  • Buying tokens or NFTs just to “flip” later
  • High-yield schemes

📉 These methods are the most dangerous and wipe out most newcomers.

Summary​

Crypto risks fall into several categories:

  1. Storage risk → losing access to your funds
  2. Useless tokens → near-total devaluation
  3. Stablecoin de-pegging → losing the $1 peg
  4. Smart contract hacks → vulnerabilities exploited
  5. Speculation → the fastest way to lose everything

Every category of crypto comes with its own risks, which will be covered in future lessons.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.