– Exchanges that do not allow withdrawal of cryptocurrencies

To trade it is necessary to have cryptocurrencies stored in an exchange. However, you should not have all your capital in this type of account for security reasons. This is because exchanges can be victims of hacks or because their operations are not very transparent.

For this reason, it is recommended to acquire a cold wallet, which is a technological device that provides security to the software that supports the operations and storage of cryptocurrencies. Unlike exchanges, cold wallets do not need to be connected to the internet, therefore, they function as unhackable security vaults. 

A key difference between a cold wallet and an exchange is that the latter does not allow offline operations and transactions.

– Ponzi and pyramid schemes

In the midst of the cryptocurrency boom, fraudulent companies have sprung up claiming to be trading and offering returns of 5% per month that are too good to be true. These are usually unknown firms, of dubious provenance, which often do not provide all the information necessary to understand how their services work.

On the other hand, the main marketing channel of these companies is word of mouth. As in any ponzi scheme, investors must invite other people to move up to the next level and thus gain access to higher profits.

Once you have invited the required number of people, you can access a product at an unbelievable price or exponential profit. The reward for bringing new people into the system is always greater than the reward generated by the main activity, so the incentive is always to recruit, not to sell products or services.

However, when the base of the pyramid is too large because each new entry in turn generates other new entries to the programme, the chain breaks and 99% of the participants are left out of the profit scheme and lose all their investment.

In this context, it is necessary to be alert to this type of scam and it is advisable to carry out a thorough investigation before making a monetary movement with these characteristics.

– Learn when to buy and when to sell

There are two key indicators that can be analyzed to know whether a cryptocurrency will rise or fall in price over the long term: market capitalisation and trading volume, and it is possible to follow these two figures through platforms such as Coinmarketcap.

On the other hand, you can analyze the foundational statement behind the cryptocurrency you’re interested in, called whitepaper. It usually includes the “roadmap” that details who created the cryptocurrency, who invested in the project, what the value proposition is, which digital exchanges they are listed on, among other variables.

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