Cryptocurrency has seen a historic rise to prominence over the last decade. In 2010, Laszlo Hanyecz famously spent 10,000 of his newfangled “bitcoins” to buy some delicious Papa John’s pizza.
Since that day, which has since become referred to as “Bitcoin Pizza Day,” cryptocurrency has become a massive, multi-trillion dollar investment option. This is due to many different reasons, from investors making ambitious investment moves to hedging against economic fears to following the advice of eccentric billionaires.
While some of these motivations are wise, others are quite the opposite, which begs the question: is online crypto trading a good idea? For many investors, the answer so far has been a resounding yes, but that doesn’t change the fact that there are both benefits and drawbacks associated with buying and selling crypto online.
Pro: Control and Flexibility
The amount of individual control that comes with online crypto trading is a massive positive. Traditionally, investing in things like stocks and bonds required going through a broker or other financial asset manager.
This oversight is removed when you’re working with a crypto trading platform. Personal investors can make each decision as they build a diversified crypto portfolio without the need for oversight or professional approval.
This isn’t to say everyone should buy and sell crypto without a second thought. It’s still important to research every crypto asset you purchase. Investors can be hands-on with this activity, reading, watching, and otherwise studying any coins that they’re interested in without having to go through a third party.
Con: Easy To Lose Track of Spending
One of the clearest disadvantages of crypto trading is the ease with which a person can part with their money. Even if they end up profiting with an altcoin or creating a robust portfolio with plenty of healthy diversity, this may leave them strapped for cash in the short term.
Part of this disconnect comes from how easy it is to lose track of interactions over time. Many crypto apps make it remarkably easy to buy and sell coins, even at the rate of dozens or hundreds of times a day.
As you identify potential opportunities, it’s all too simple to throw more and more money at your crypto account without a second thought. It’s important for investors to be aware of this potential activity and to set limits for how much cash they’re willing to put into their accounts.
Pro: Online Tools for Real-time Monitoring
One clear advantage that comes with online trading crypto is the transparent, real-time manner of the activity. Modern tools have made it possible to buy and sell cryptocurrency at a moment’s notice as traders identify trends and swings in the market.
Many platforms make in-the-moment trading possible. While you can use multiple platforms depending on your needs, it’s always wise to vet a platform thoroughly before you commit to signing up.
For instance, Coinseed was a popular trading app — that is, until it was sued for fraud by the New York Attorney General. As with everything else in the trading world, always look before you leap.
Con: Internet Dependent
While real-time monitoring is a plus, it only works if you’re connected to the internet. If you aren’t actively online, you can’t get the updates that are critical for making sound trading decisions.
The good news is that it’s increasingly easier to stay online at all times. Wi-Fi hotspots are everywhere (although you want to practice internet safety if you’re on a public connection). Smartphones make it possible to stay in touch with your crypto account as long as you’re near a cell tower.
Still, the fact that you can be disconnected from your crypto if you lose your internet connection is always a potential factor that could complicate your trading activities.
Pro: Accessible for Beginners
One of the best elements that the crypto world has going in its favor is its accessibility. It doesn’t matter if you’re a seasoned investing veteran or a newbie with a few extra dollars left over from a paycheck. If you want to invest in crypto, you can.
Along with crypto trading tools being highly accessible for beginners, there is also a plethora of investment resources out there that can help guide new traders to the growing cryptocurrency world.
Con: Potentially Addictive
The accessible nature of cryptocurrency is a clear plus for anyone looking to get into the investing game. However, it’s also a two-edged sword. From its ease of use to the temptation to constantly add more of your hard-earned money, it’s very easy for cryptocurrency to become an addictive activity.
As you see a hundred dollars become 10 times that number, it’s all too easy to transfer a thousand more dollars into your account — even though there’s no guarantee that you’ll get the same results. There’s a very real possibility that you’ll lose money if you aren’t careful.
The addictive element of crypto trading is very real. That’s why it’s important to establish clear trading rules for yourself. For instance, learn about and take advantage of things like stop-loss order and auto-order features, which most trading tools automatically provide. This can help you curb potential losses and avoid making overly risky decisions.
Along with utilizing the risk-management tools available, limit how much cash you’re willing to invest. This creates an automatic barrier that can help you manage any addictive behavior.
As a final step, set up lines of accountability. Find someone you can trust — both in their ability to understand crypto trading and call out any of your irresponsible behavior. Having an “accountability buddy” can help you make sure you follow your own rules.