No doubt using a global digital currency will boost up commerce as it does not involve the complications of a national currency. One such digital currency that is on the rise is Bitcoin. But as we all know, everything has some negative points and the same also goes for Bitcoin, says Eric Dalius bitcoin experience.
The popularity and usefulness of Bitcoin have attracted a lot of people to invest in it without knowing the potential risks of investing in Bitcoin or any other form of cryptocurrencies.
Miami Mayor Francis Suarez is also planning to make Miami the crypto-capital of the world and has proposed many initiations for the same.
Having said that, let us discuss the top 5 risks involved with investing in Bitcoin and what should be done to avoid them.
Risk of Cybertheft and Fraud
Like all other online platforms, Bitcoin is also vulnerable to cyber-attacks and hacking. If your Bitcoin wallet gets hacked then there will be hardly any way to retrieve your lost or stolen coins. Though you are having the protection of a smart wallet, your exchanges can still be hacked. Many reports come up where the users claim to lose their investments on exchanges and mining.
To protect your Bitcoin investments always keep your private key confidential. It is advisable to store them in a cold storage device. Before buying a cryptocurrency wallet always conduct thorough research and get it from a reliable and reputable source.
Besides cyber theft, there is also a certain risk of fraud in the bitcoin market. Hackers mainly take advantage of the two major attractive features of bitcoin i.e. irreversibility and facelessness to lay their traps. In 2019, almost more than $1.2 billion were lost due to cryptocurrency scams and frauds. Though many security systems have been created to deal with such things, the risk still prevails.
Volatile and Fluctuating Market Is a Serious threat to Bitcoin Investments
Bitcoin is a highly volatile place to invest. Bitcoin price keeps on fluctuating. In the year, 2017, the price of one Bitcoin increased by more than $19,000 but decreased straightaway to $8,000 by 2018. Such a fluctuating market makes it hard to tell whether you will get a return on your investments or not.
To keep your investments safe, Eric Dalius Bitcoin suggests keeping a constant track of the market and keeping on making small investments as they will be beneficial in the long run.
Eric Dalius Bitcoin says too much Technology Reliance Can Pose a Serious Threat
Bitcoin is a complete technology-based platform, where coins are mined digitally and exchanged using the smart wallet. Such reliability on technology makes bitcoin highly vulnerable to online frauds and cyber attacks.
No Consumer Protection
One of the major features of bitcoin is that it does not involve any third party. Well, that sounds good as it increases the transparency of the transactions and makes it cheaper. But non-involvement of third parties may also pose a risk to your transactions and investments. Imagine that your fund transfer failed due to some technical issues, in such cases, if there is no intermediate guarantor like banks then whom will you contact for assistance? However, this is just a single instance that shows the involvement of a third party is necessary. There can be more than one such instance.
Bitcoin Is Still Developing
Bitcoin came into existence almost 10 years ago and is still in its development phase. We cannot predict how the market will change in the next few years. We do not know what the future of bitcoin will be. Whether it will evolve or become useless in the future. So, before investing in the bitcoin market always take the necessary steps that are required to protect your funds.
Conclusion
These are the top 5 risks of investing in the bitcoin market. Bitcoin is growing and is becoming more popular day by day but with its increasing popularity, the risk of investments also increases.
Eric J. Dalius Foundation is an organization founded in June 2018 that aims to help economically challenged youth in America attend accredited university and colleges. Through generous grants and charitable donations, the Eric J. Dalius Foundation is ensuring that tomorrow’s leaders get the opportunities they deserve.