One of my favorite points is that the cryptocurrency world is actually a tower defense game.
You hold onto your coins by defending yourself from all sorts of manipulations, tricks and traps that come to “cheat” you of your coins. These traps keep changing during bull and bear markets, trying their best to take away all your coins.
And your "combat mission" is to protect your own coins, it's that simple.
Many people think it is easy to hold onto coins, but it is not easy at all. For example, the price about half a year ago is about the same as it is now. How many people have the same amount of coins now as they did then? I think many people have less coins.
In fact, these traps are just changing their gorgeous appearances. In essence, they are always the same. But you must be vigilant. After all, you may think that your investment is like this:
I have summarized for you that there are three big pitfalls that you must be careful to avoid in the cryptocurrency circle. In fact, there are three big mines that you may fall into and three big bombs that may explode.
I hope everyone can keep their coins well.
1. The first pitfall: earning interest on deposits.
It is not to say that all businesses that earn interest on deposits are scams. There is no problem with normal lending. However, normal lending, such as products like Yubibao in large exchanges, is probably not of interest to you at all. Why? The interest rate is too low, even lower than the interest rate of bank financial management.
Normal low-interest loans are normal and relatively safe. The big pit I want to talk about is products such as exchanges or wallets that offer high interest rates, attracting people to deposit coins into them through high interest rates. In fact, to put it bluntly, these products are just a replica of the "capital disk" in the currency circle.
Many people hope that by putting their coins somewhere, they can continuously increase the coins and easily obtain more Bitcoins. This is also the core of all scams, which harvest people's desire to make coins easily.
This pit is relatively easy to avoid, just be vigilant.
The second pitfall: Blindly increasing leverage
The existence of leverage tools is definitely a good thing for many people. If leverage tools are used properly, they can indeed help many people make investment allocations more flexibly.
But unfortunately, many people "blindly increase leverage", and open high-multiple contracts. In fact, those who increase leverage without any risk control should have been well educated in the extreme market conditions such as 313 and 519. After all, in such a market, let alone high leverage, any leverage would be liquidated.
This pitfall is very common. Many people forget that it is a very risky thing to play with. So this pitfall is not easy to avoid. After all, the currency is in the exchange, and the contract is opened at the first sign of itching. The basic knowledge may not be learned thoroughly, and even the liquidation price, mark price, stop profit and stop loss are not understood. If you don’t fall into the pit, who will?
Everyone should remember that there is a big pit behind leverage, so be cautious. Once you encounter extreme market conditions, you will not step into a pit, but a thunderbolt.
The third pitfall: Others help you make money
"I have a quantitative software here, and the annualized rate is 100%. Do you want to invest some money to try it out?"
"This software I made is for arbitrage, with an annualized return of 200%. It's very stable and safe. Would you like to try it?"
"I am working on wallets and exchange platform coins. I send one coin and get more platform coins back. It's very reliable."
“Just deposit coins into this exchange, choose this awesome guy, follow his orders with one click, and get rich.”
And so on. In fact, quantitative/arbitrage/arbitrage/copy trading are indeed profitable models, but the first one is not a low-threshold thing. For example, quantitative, are there any quantitative that can really make money? Of course there are. But for quantitative that can really make money and is reliable, you can't invest in it at all, and people don't need to come to you for fundraising. The same is true for arbitrage and arbitrage. Some of my friends are doing these things specifically, and the profits are not bad.
So what I want to emphasize is that it’s not that these things themselves are bad, but the fact that they come to you for investment shows that they are bad.
In fact, it is not just the cryptocurrency circle, but any market has the same ultimate logical paradox of the leeks: the big guys are really awesome, they make hundreds of millions every year----such big guys are willing to take you to make money together.
Why do you think you are the chosen one?
This pit is quite big and hard to avoid. It is not about being cautious, but about controlling your greed and staying rational.
2. Now that we have talked about the three major pitfalls you may encounter, let’s talk about the areas where you are more likely to be “exploded” in the cryptocurrency circle.
The first bomb: the exchange collapsed.
This hidden danger has always existed. In the history of Bitcoin development, many large exchanges have collapsed. From the largest Mentougou, to the first-tier Bitfinex, to the subsequent theft of Binance, the collapse of Fcoin, etc., although exchanges are the main place for many people to store coins, we should still be clear that the coins you see in the exchange are not real coins, but the exchange’s debt to you, just a number.
Is there a high probability that an exchange will go bankrupt? Not very high. Especially for the three major exchanges, I think the probability of going bankrupt is only about 1%, which is extremely small.
But no matter it is 1% or 0.01%, as long as this black swan happens and you happen to keep all your coins in this exchange, then it will be 100% for you.
“Every speck of dust in history weighs like a mountain on the heads of ordinary people.” Don’t gamble on low-probability events that you can’t afford to lose, and don’t put all your coins in one exchange.
So I believe that there are still many friends who put their coins in large exchanges, even second- and third-tier exchanges, and various small exchanges. It’s not that you can’t play with it, but it’s better to avoid putting all your assets in one exchange.
This thunder is too big.
The second thunder: the project party thunder
The scope of the project parties here is quite deep, because many products can be called "projects". For example, the "EOS ecosystem" and the DeFi project that went bankrupt before, as well as Fil, are also a type of project party bankruptcy.
The core is actually that you give your money to a project party, and then the project party does not fulfill its promise, but takes your money away. Whether you buy coins in exchange or deposit them, in short, you hand over the coins to a place you cannot control, so once it explodes, you will lose everything.
This is the logic behind why people say “Not your key, Not your bitcoin”. When you put your coins in a place that you cannot control, the risk of a sudden collapse will always exist.
The third thunder: wallet thunder
The most impressive wallet crash is probably the plustoken runaway last year. In fact, there are many similar wallet crashes of all sizes. Many people think that it is always safe to put coins in a wallet? In fact, it is not necessarily. The problem is not whether your wallet is safe, but whether you have control over your private key.
For example, wallets like plustoken will never let you control your private keys. They are purely centralized wallets. The coins you have in them are not real coins, but just numbers for you to see.
No matter how reliable the wallet software is, it is just a software that helps you open the private key to send transactions, but it cannot guarantee the absolute safety of your coins. If you want to hold the coins for a long time, you still have to master the private key yourself and don't rely too much on the wallet.
The above is my summary of the most common pitfalls and pitfalls in the cryptocurrency circle. I hope it can help newcomers who have just joined the circle. Those who are content with everything are always happy.
