First, I should declare that I do own and trade Crytocurrencies. But as with any investment it is important that we look into some of the risks.

Flash Crashes

Digital currencies are owned by comparably less investors that traditional currencies. We know that tens of millions of people hold and use the Dollar or GBP every single day. Banks, businesses and individuals use traditional currencies each and every day. If one large investor sells or buys this has very little impact on the market. Only when hundreds of thousands of investors sell or buy are there major changes in the market.

Compare this to Ethereum. If one, yes one large investor sells this can have an enormous impact on the market.

At this time in the world of digital currency there is not the spread of risk.

Managing your risk

It is a good idea to spread your investments. I would not hold only investments and savings in digital currencies. Make sure to hold some traditional investments - stocks, shares, cash, property. This ensures that you are exposed to growth in multiple sectors and protected from risk.

What other risks do you think there are in CryptoCurrencies?

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