What are the disadvantages of cryptocurrencies and the advantages of the Forex exchange?
  • Lily Chen
  • 01.09.2023

Cryptocurrency exchanges are favoured by investors who wish to increase their capital by purchasing digital assets. However, unlike banks, which protect deposits through insurance funds and government regulations, cryptocurrency exchanges lack these guarantees.

As a result, many cryptocurrency exchanges fail to meet security requirements and can be hacked or go bankrupt, resulting in the loss of investors' data and funds. They can also encounter technical problems and render your assets inaccessible. If you want to protect your funds, the best option is to withdraw them into a cold crypto wallet.

The only advantage is that it's a cold wallet

A cold crypto wallet allows you to store your cryptocurrencies without an internet connection, reducing the risk of losing value. It's also a reliable alternative to cryptocurrency exchanges.

Exchanges are regulated by the authorities, offer a wide range of trading instruments and are more stable and secure for investors.

If we take the well-known example of bitcoin, its price reached $20,000 at the end of 2017, then plummeted to $30,000 in early 2019, leading to high volatility. Investors lost hundreds of millions of dollars as a result.

The absence of uncertainty. Uncertainty as a grain of sand

Cryptocurrencies are intangible, i.e. they have no collateral in the form of physical or legal assets, i.e. they have no intrinsic value, and their price depends entirely on market supply and demand.

Some cryptocurrencies, such as bitcoin, may have a limited supply, but this does not guarantee their value. Cryptocurrencies are managed by consensus-based network mechanisms, which are more decentralized than traditional financial asset management.

However, this does not mean that cryptocurrencies are immune to the volatility and risks associated with investments. Cryptocurrency prices can fluctuate significantly due to a variety of factors, including changes in government regulations, technological innovations and changes in the cryptocurrency market.

If you want to lose money, welcome to the world of cryptocurrencies

In short, cryptocurrencies are high-risk assets that don't offer the security of real assets. Those who decide to invest in cryptocurrencies should be aware that the value of cryptocurrencies depends on many factors, and that investing in cryptocurrencies is not suitable for all investors.

Thus, storing funds on cryptocurrency exchanges can be risky, especially for beginners, so the best option for those wishing to invest in digital assets is to store them in a cold crypto wallet and then trade them on a forex exchange.

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