I love the crypto world. It is a dynamic environment; excitement is never lacking. People are open-minded and optimistic. New projects are constantly emerging, and there are many alternatives. Moreover, nowadays prices are on the rise, what more? Well, there are risks.

What can we do to deal with the risks we face in the crypto world? I tried to summarize in 7 items.

Portfolio Diversification

Probably everyone has heard of the saying, "Don't put all the eggs in the same basket." Three years ago, I invested in a single cryptocurrency, although I knew this principle very well. Then the value of that cryptocurrency fell to one in the twentieth. However, at that time, the value of Bitcoin had dropped to only a third. And Bitcoin recovered quickly, and I had to wait a long time for the cryptocurrency I bought to recover.

I currently have six cryptocurrencies (and many tokens) in my portfolio. So I am less affected by dips. (And I benefit less from ups) By the way, I haven't invested all my financial savings in cryptocurrencies. I guess I'm a cautious type 😊.

Futures

It is possible to short-sell cryptocurrencies such as Bitcoin, Ethereum, and Binance Coin on Binance and many other exchanges with up to 100 times leverage. So why should we need to short-sell cryptocurrencies? We may be waiting for prices to drop and want to make money on this prediction. Or we have crypto assets, and we get a return on them. In this case, we can use futures trading to protect ourselves against price drops. I recently shorted BNB and Ethereum to hedge my assets in the crypto world. I planned to compensate possible losses with the futures premium. As prices went up, in a few days, all my collateral liquidized, I suffered severe losses. But I don't regret it, so I got an expensive education.

Several factors make it challenging to use futures for hedging purposes. For one thing, there is no such possibility for all cryptocurrencies. And because the volatility is high, the cost of carrying positions is also high. As the crypto market deepens, I think this opportunity will become more effective.

HODL!

HODL was born with a message posted by a user named GameKyuubi on a Bitcointalk forum in 2013. At that time, the Bitcoin price was dropping disastrously. GameKyuubi, who accidentally wrote HODL instead of HOLD in his first message, explained the situation as follows in his second message: "WHY AM I HOLDING? I'LL TELL YOU WHY. It's because I'm a bad trader, and I KNOW I'M A BAD TRADER. Yeah, you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a million bucks sure no problem, bro." (Source: Investopedia)

Since I (partly) acted following the HODL philosophy, which means buying a cryptocurrency and keeping it for many years, I am now happy with my cryptocurrencies, whose value fell to one in twenty. When we consider the mathematical basis of the issue, we can say that the exponential increase effect protects from the damage caused by purchases made at the wrong times. Then we repeat it all together. HODL!

Buying Options

The HODL philosophy may not suit everyone because it requires a long-term investment in reliable cryptocurrencies. What if we want to invest in the short term but are afraid of situations such as extreme price falls. Buying options from institutions such as Binance, Hegic, Finnexus can be a suitable solution. For example, by making an advance payment, buying a put option would be appropriate. Buying such an option will protect us from excessive short-term drops in the Bitcoin price.

Earning Crypto Money

If we haven't made a monetary investment, the depreciation of the cryptocurrencies we hold may make us less upset. In addition to posting on platforms such as Publish0x.com, we can also earn crypto by performing specific tasks in the virtual world like using Brave Browser or Presearch Search engine.

Investing in Stability Coins

Cryptocurrencies pegged to 1 US dollar such as Tether USD, USDC, Binance USD have become essential tools to avoid volatility. Why would we want to buy a currency that will not rise in value? It is possible to get a significant guaranteed return by parking stable cryptocurrencies on exchanges or DeFi platforms.

Buying Insurance

As we all know, the risks encountered in the cryptocurrency world are not limited to price drops. Security gaps can occur in protocols related to financial transactions. In addition, there may be situations such as wallets or exchange hackings. We can capture such risks through applications such as Nexus Mutual, Unslashed, Nsure Network.

Due to the subject, I focused on negative possibilities in this article. Thanks for reading.

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