Forms Of Investing In Cryptocurrencies And Taking Advantage Of The Opportunities They Create| FXMAG.COM

Ways to invest in cryptocurrencies

Despite a number of practical applications, cryptocurrencies became famous mainly as assets

investments with above-average price volatility, which still attracts crowds of newcomers to them investors.

There are many forms of investing in cryptocurrencies and taking advantage of the opportunities they create unusual price volatility. In this report, we will focus on a brief description and comparison

two probably the most popular of them: trading on cryptocurrency exchanges and CFDs available e.g. at XTB.

Cryptocurrency trading on exchanges

One of the main forms of investing in cryptocurrencies is their purchase on cryptocurrency exchanges, where you can buy and sell tokens directly on the market. One of the strengths exchanges is their wide offer - the investor gains access to hundreds of digital currencies in one place.

By making a purchase transaction on the exchange, you become the owner of a given cryptocurrency, and the purchased one assets are deposited in your exchange portfolio. An additional advantage of investing in some exchanges it is possible to exchange different tokens with each other, which is significant streamlines trade and allows you to react quickly to changes on the market.

On the other hand, cryptocurrency exchanges usually do not have external authorities supervisors who regulate their safety. Moreover, unlike supervised financial institutions, they are not members of guarantee funds, which are a guarantor of the recovery of all or part of investors' funds or assets, in the event of collapse of such an institution.

The unclear regulatory situation of cryptocurrency exchanges also results in problems with deposits and withdrawals of funds from accounts held on them - they may be retained and subjected to detailed control or not be accepted by the bank at all. Also, many exchanges still fail allows the withdrawal of the equivalent of accumulated funds in fiat currency, offering only the ability to transfer your cryptocurrencies to another virtual wallet.

Unfortunately, history also shows that stock exchanges are not always a safe place to be storage of owned tokens - many exchanges have already fallen victim to hacker attacks or after it simply disappeared from the market along with its users' tokens. One of the biggest attacks hackers in terms of the amount of stolen Bitcoins is the 2014 attack on the largest then the stock exchange - Mt. Gox. Its users then lost over 850,000 Bitcoins worth then almost USD 500 million. If the theft happened today, the value of the stolen BTC would exceed USD 34 billion.

There has been another heinous theft recently. Hackers exploited a vulnerability in Ronin digital wallet software - allowing users to exchange

cryptocurrencies used within various blockchain networks. They were stolen Ethereum cryptocurrencies and USD Coin worth over $600 million! worth

It is worth noting that the creators of this wallet detected the hacking attack only 5 days after it made.

Advantages

A very wide offer and a large selection of tokens
Possibility to buy cryptocurrencies and accumulate them in the wallet
Ease of exchanging one cryptocurrency for another

Disadvantages:

In the vast majority of cases, there are no external supervisory institutions
No external funds guaranteeing the recovery of tokens or funds in the event of the collapse of the stock exchange
Emerging problems with deposits and withdrawals
High risk of hacker attacks