The Risks Of Investing In Bitcoin

risks investing in bitcoin liability btc

Investing your money in Bitcoin comes with some risks that you must be aware of before diving deep. While most people see the potential of bitcoin as a tool for investment, most people agree that they are not ideal to be used as a medium of exchange You must understand that Bitcoins do not have any guaranteed value and since it is completely virtual, investing in Bitcoin is a risky endeavour. Since it is still a novel tool for investment in today's day and age, no one can vouch for its credibility or its long term potential. However, they promise high returns which makes them so lucrative to potential investors. 

Here are some of the types of risks linked to bitcoin investment: 

Security Risk 

Most bitcoin owners simply receive their Bitcoins from the various Bitcoin online markets or Bitcoin exchanges rather than from various mining operations. Now, these Bitcoin exchanges are digital and are susceptible to malware, hackers and other various threats. Hence, hackers can get access to the hard drive or the computer and steal these encryption keys. When they target the Bitcoin exchanges, they simply have the ability to access all the accounts and wallets that are associated with the exchange and get their hands on the Bitcoins stored in the wallets. Since all transactions made with Bitcoins are irreversible, this becomes highly problematic and you can run a huge loss. The security risk linked to owning Bitcoin is very real and potentially disastrous for cryptocurrency enthusiasts. 

Regulatory Risk 

You need to understand that in spite of its huge popularity, Bitcoins are a direct rival to the traditional currency and are used for various illicit activities including money laundering, tax evasion and much more. This requires the government to use their regulatory forces into banning the sale or use of bitcoin entirely. Hence, your investment in Bitcoins can become null depending on the regulations employed by your country concerning Bitcoins. There is no uniform legislation when it comes to bitcoin which makes the future of bitcoin seem very unpredictable. 

Fraud Risk 

There are several instances where scammers and fraudsters have sold fake Bitcoins to not only those who are new to the land of Bitcoins but also to seasoned investors. Bitcoin does use private key encryption which is fundamental in verifying the owner and providing the legitimacy of transactions, there are some cases of fraudulent activities. While selling and manipulating the price of Bitcoins has been known over the years and has been documented, this makes it very important for you to rely on Crypto Revolt to stay away from such traps. 

Insurance Risk 

Most insurance is generally insured by either various government or federal programs. This truly gives a sense of security and comfort, knowing that the government has your back. However, when it comes to investing in Bitcoin or any other cryptocurrency for the matter, your transaction is not insured by anybody whatsoever. While many efforts have been made into making sure that these investments be insured as well, only that part of the transaction that involves cash are nowadays insured, that too, only in a handful of countries. This makes it very uncertain for you to invest in Bitcoin even when you know that it has a high return value. In case of any fraudulent activities or if your bitcoins are stolen, you are left to your own device as there is no insurance against such an investment. 

Market Risk 

No matter whether you invest in cryptocurrency or traditional currency, any investment comes with risks that are associated with the fluctuations in the BTC market. While there are many ways that the movement of money is tracked by economists using various complicated formulae, when it comes to cryptocurrency, the math becomes even more difficult. Cryptocurrencies can become worthless and lose all their value overnight if people suddenly stop accepting bitcoin as a currency of any sort. However, Bitcoin has been able to stand out in the market, competing against the various other cryptocurrencies that have developed in the last few years. 

Reduce Risks Buying Bitcoin

It is very important that you understand the various risks associated with investing in cryptocurrency. While it may seem like a great opportunity, it is your responsibility of weighing the risk with the benefits before you make your move.

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