By Mitch Rice
If you are a person who stays updated with the virtual currency news, then you might be aware that Bitcoin is considered by many as the future of money. It has also completely revolutionized the world of money because bitcoin is one of the most profitable currencies today, and its value is very high in the market. However, we all know that everything successful or popular also has drawbacks. Despite the massive popularity of Bitcoin, there is a severe kind of risk that a person might encounter while investing in it. Many people are rushing towards making Bitcoin investments but they need to know about the concerns surrounding the Bitcoin market. Here we will list some severe risks of Bitcoin investment and how a person can avoid them.
Highly fluctuating market
There is no denying the fact that Bitcoin value is constantly fluctuating in nature. Sometimes the value of Bitcoin increases at a significantly higher rate, and the next moment, its value falls to a great extent, so there is no way to predict the actual changes in the value of Bitcoin. With such massive unpredictability in the Bitcoin market, no person can tell you what you will get in return for your Bitcoin investment. But you need to know the strategy by which you can avoid a huge loss. Therefore, you should keep a focused eye on the Bitcoin market to stay updated with all the news and trends that can affect the price of the Bitcoin currency. In addition, you should know that a beginner should always start by making a small investment in Bitcoin, as it will be more profitable in the long term.
Cyber hacks
We all know Bitcoin is entirely based on technology, which is why it is always open to cyber theft. It would be best if you remembered that Bitcoin involves a considerable risk of hacking, and there is no way for a person to retrieve their Bitcoins once they lose them. There are many reports in which many Bitcoin investors lose their coins because of mining and exchange losses. The Bitcoin exchanges have a higher risk of hacking because they don’t have robust security features like a smart wallet. Moreover, keeping your Bitcoins in a smart wallet is a good idea, but you also need to ensure that you don’t forget or misplace your private keys because once you lose them, there is no way you can get your coins back. You should also know that there is a vast range of cryptocurrency wallets, so you must do careful research to find the best and most reliable option.
No regulation
Currently, the entire Bitcoin market is working without any regulations from the government. You should know that the government has no authority over Bitcoins, and the market is also young. There are no taxes and no laws regarding Bitcoin and its transactions. However, no government regulation is one of the exciting features for the people as the investors find it one of the best things about Bitcoin. Therefore they want to make a Bitcoin investment. But the lack of regulatory control can lead to many problems, and no taxation can make Bitcoin cutthroat competition for the Fiat currency. So there is no telling whether Bitcoin will exist in the future.
Relies on technology
Bitcoin is an online currency which is entirely reliant on advanced technology. The mining of Bitcoins also takes place through technology, and the transaction of Bitcoins and storing of Bitcoins requires technology. You will see that everything you do with Bitcoin takes place online, and the technology is required for it. If there is no technology or technology failure, then there is no way you can have access to your Bitcoin. Moreover, there is no backup for cryptocurrencies like gold, real estate and mutual funds. Bitcoin is a 100% technology-based currency, which is why it is highly vulnerable to cyber frauds and hacks.
Limited use
Bitcoin is a new way of making transactions, and it is a significant digital currency, but still, very few companies are accepting Bitcoin as a mode of payment. Limited use of Bitcoin is a disadvantage of owning Bitcoin as you cannot buy everything from this digital currency as you can from the Fiat money. But the good thing is that the companies accepting Bitcoins are increasing daily.
Data and information are provided for informational purposes only, and are not intended for investment or other purposes.
