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Forex in this article
• “Be Your Own Bank” – Independence from banks and currency monitoring
• “Not your keys, not your coins” – Only those who have the key have economic sovereignty
• “Do Your Own Research” – Form your own opinion through your own research and thus protect yourself from fraudsters
cryptoverse has now established itself as a new investment opportunity for numerous investors. Nevertheless, it is not so easy to find your way through the jungle of different currencies, blockchains, crypto trends and technologies. In addition, cryptocurrency trading also involves significant risks that investors should always be aware of. The following three maxims should therefore serve as a guide for finding your way around the cryptoverse.
Commandment 1: “Be your own bank”
Let’s get to the crypto scene’s first bid: “Be Your Own Bank” or in German “Be your own bank”. What is meant by this is the basic idea of cryptocurrency from the very beginning, namely that cybercurrencies are designed decentralized and therefore do not require an intermediary, i.e. without banks, but are also free from the influence of states and central banks. The motivation behind it is clear. It has often happened in the past that entire financial crises were triggered by individual banks, which again had to be corrected with taxpayers’ money – without permission being asked for this. But it is not enough that taxpayers can only decide indirectly via elections what the money is to be used for, nor can the population of a country freely use other means of payment than the legal one. Therefore, the Be Your Own Bank principle stands for freeing yourself from these imposed restrictions and empowering everyone to take responsibility for their own money. However, this is not without risk and is not nearly as easy as crypto enthusiasts might imagine. Finally, many people who want to invest in cryptocurrencies cannot avoid using a centralized crypto exchange, leaving the investor dependent on third-party institutions.
Other Crypto Wisdom: “Not Your Keys, Not Your Coins”
Which brings us directly to the second maxim of the cryptoverse: “Not Your Keys, Not Your Coins”. What is meant is that ultimately only those who actually hold the key to the crypto account have power over the crypto assets. The same applies here: If crypto brokers or trading places like Coinbase & Co. are used to manage their own cryptocurrencies, it is de facto these third-party providers who hold the keys and thus the responsibility. In light of recurring hacks of major crypto providers, from which billions worth of cryptocurrencies have already been stolen, investors should be aware of this risk when handing over the key to their own cyber currencies. On the other hand, if you yourself have lost the key to the wallet, you cannot blame anyone else. The absolute personal responsibility that goes hand in hand with sovereignty over one’s own finances is therefore not without risk, because a lost key cannot be recreated even with external help.
Third maxim: “Do your own research”
A third widespread rule in the cryptoverse: “Do Your Own Research,” often abbreviated as DYOR, encourages crypto investors to do their own research before making any investment decision. The background is that with the first crypto boom in 2017, numerous new tokens saw the light of day. However, not all “Initial Coin Offerings” were actually tied to real cryptocurrencies. So there were probably fraudsters who got away with the money invested by hopeful investors and let them cheat. Even today, there are still numerous scams trying to get money from bona fide investors with big promises. In addition, it is often not clear to uninformed investors whether they are simply exchanging ideas in the community or whether they are currently viewing ads from other users. In the crypto community, for example, there is what is known as shilling, where individuals advertise a coin in the hope of positively influencing the exchange rate. So there is no way around taking a deeper look at the currency you are interested in.
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claim for recourse.
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