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What am I getting into?

Wondering about what some of the risks might be in crypto? Read on to find out more.

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Written by Easy Crypto
Updated over a week ago

Embarking on your crypto journey is exciting and it is important to make sure that you know what is involved and that you are happy with the decisions that you are going to make, including the risks.

As with any financial decision, there are pros and cons, risks and benefits. As we don’t know your personal situation, we would like to give you an overview of some, but not all of the risks, that may be involved, so you can make the best choice for yourself. If you need personal advice, then it is best that you contact a professional advisor.

Most importantly, past performance is never a guarantee of future results so don’t rely on how crypto has performed to inform your view about what’s going to happen.

Considerations of Trading and Holding Crypto

Trading and holding crypto is unlike traditional currencies or other commodities. It involves significant and exceptional risks, they can be very volatile and the financial losses can be substantial. You should carefully consider and assess whether trading and holding crypto is suitable for you depending on your financial circumstances and tolerance to risk, and seek specialised advice if you need it or are unsure.

  • Transactions can’t be reversed: Once a transaction has been completed with us, it is impossible to reverse it.

  • Volatility: Crypto is extremely volatile and it may swing depending on the market, confidence of investors, competing cryptocurrencies, regulatory announcements or changes, technical problems or any other factors. Because of this volatility, the value of all crypto can go up and down (quite dramatically).

  • Private Keys: If your wallet has a private key, you should always exercise extreme caution whenever you select, store or transmit it. If another person learns your private key, then they can take your crypto! If you forget or lose your private key or password, you won’t be able to access, and may lose, your crypto.

  • Regulatory Risk: For the most part, the crypto world remains unregulated and it is currently not recognised as legal tender. Because of that, there is limited protection if your crypto is lost (even if not it’s your fault). Also, crypto may be prohibited in certain jurisdictions (or the rules may change so it becomes prohibited).

  • Liquidity Risk: Depending on the actual crypto coin/token, liquidity may be limited or disrupted - there is never a guarantee that you will be able to sell or exchange your crypto at any price. Also, Easy Crypto may make the decision to remove a coin from its platform (including due to liquidity issues) - in that case, you may need to sell or trade it via another platform.

  • Tax risk: There are specific tax rules around crypto - it’s important you understand these implications and always comply with your reporting and payment obligations - we don’t offer any tax advice so if you need this, please reach out to a tax expert to help you.

It is important to take all of these factors into consideration when venturing into the world of crypto. No one knows your personal situation better than you, so make sure you spend time on education to make the best choices for yourself.

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