Cryptocurrencies are gaining popularity, but they still have a long way to go before they can achieve mainstream success. One of the main challenges facing cryptocurrencies is that many investors are afraid to put their money into them. Here are the top five reasons why people don’t want to invest in crypto exchanges:
Fear of losing money
There are many reasons why investors are reluctant to put their money into Bitcoin and other cryptocurrencies. Here are some of the most common ones:
- Fear of losing money due to volatility. Many people who invest in the stock market don’t necessarily understand how it works, but they understand that if they buy a share of Apple or IBM and hold on to it for a year, they’ll make more money than if they had bought one share last week and sold it today (assuming there was such a thing as “last week”). However, Bitcoin’s price can fluctuate by tens—or even hundreds—of a percent over the course of just days or hours. If you’re not sure that you know what you’re doing when investing in cryptocurrency, then this could be scary!
- Fear of losing money due to regulatory uncertainty. Given that cryptocurrencies have no central authority regulating them as governments do with fiat currency (like dollars), there is potential risk associated with using these digital assets as investments due to possible legal problems arising from new regulations being introduced later on down the road which could affect their value negatively or even eliminate them entirely from existence altogether!
Risk of fraud
The risk of fraud is inherent in the cryptocurrency market. This kind of risk is difficult to detect, investigate and prosecute. It is also difficult to recover from, as it can cause significant damage to an investor’s portfolio.
In addition to the risks faced by individual investors, there are concerns about the integrity of exchanges themselves. Many cryptocurrency exchanges have been hacked in recent years; some have gone out of business entirely due to mismanagement or loss of funds from hacking attacks (see below).
Cryptocurrencies are very volatile
Volatility is the amount of movement in the price of an asset over a period of time. Cryptocurrencies are very volatile, so if you’re looking to get into crypto investing, it’s important to understand how volatility differs from risk and uncertainty.
Risk is the possibility that something bad might happen. For example: if there’s a risk associated with your investments or business venture – like a new product launch – then this could lead to losses if things don’t go as planned. In contrast, uncertainty means you’re not sure whether something will happen or not; there could be positive outcomes but also negative ones too (like getting sick). These factors can affect financial markets and their underlying assets such as stocks or shares within them.”
Lack of a regulatory framework
Since cryptocurrencies are not regulated by any central authority, it can be difficult for investors to assess the risks associated with investing in cryptocurrencies. Cryptocurrencies are not backed by any asset and have no legal tender status. They are also not insured or guaranteed by a government entity.
Cryptocurrency exchanges also lack transparency over their operations, as well as how they protect customer information and assets. As such, some investors might be concerned about the security of their cryptocurrency holdings when using exchanges that are unregulated or poorly regulated.
Lack of infrastructure
There is a lack of infrastructure to support this large influx of crypto investors.
In order to understand the problem, let’s take an example: You are planning on buying a property in Nigeria and the government announces that it will be accepting Bitcoin (BTC) as payment for all transactions, including taxes. What would happen? The demand for BTC will increase so much that people will rush into buying and selling BTC just because they want to profit from the opportunity presented by the government. This could lead to a massive increase in price which could then attract more people wanting to get rich quick by buying BTC at low prices and selling them at higher prices later on when there were fewer Bitcoins available for purchase due to increased demand or simply running out altogether!
There are no clear rules and regulations on the legal status of cryptocurrencies
There are no clear rules and regulations on the legal status of cryptocurrencies. Cryptocurrencies are not regulated by any central authority, nor are they backed by any government or group of people. They do not have any legal tender, nor do they represent a promise to pay anything. There is also no physical commodity that backs them up, such as gold or silver (although some cryptocurrencies are minted in physical form).
The five main reservations of investors from crypto exchange
Crypto exchanges are still new, and the lack of regulations means that investors face a number of risks. These can include:
- The risk of losing money, especially if a cryptocurrency is volatile.
- The risk is that fraudsters will target crypto exchanges to steal your information or money.
- Crypto exchanges have not yet been regulated by any specific legal framework or authority. For example, there are no clear rules about what constitutes an illegal transaction in cryptocurrencies and how these should be handled by police forces around the world.
- Lack of infrastructure may make it difficult for some people to buy cryptocurrencies on an exchange—for example, they may not have access to reliable Internet connections or smartphones with modern operating systems (such as iOS12)