Bitcoin is a digital currency that has taken the world by storm. Unlike any other currency in existence, its value has been increasing rapidly. While this may seem like a perfect investment opportunity, some risks are associated with investing in Bitcoin.
If you’re a beginner, you must choose Crypto Genius to trade bitcoin. This blog post will discuss the top seven risks of Bitcoin investment.
Let’s take a look at these risks.
- Volatile and fluctuating market
Bitcoin is a new and volatile investment. The market can change rapidly, and prices can go up or down very quickly. Investing in Bitcoin carries a high risk of losing money. The value of Bitcoin has been known to plummet without warning. In December 2013, the value of one bitcoin fell from $1200 to just $200 in two days. In January 2015, the price dropped by another $100 in a single day.
If you’re not prepared to lose all your money, it’s best not to invest at all. Bitcoin is also very susceptible to media hype and speculation. When the news hits that a big investor or company has started accepting Bitcoin, the price tends to jump up quickly. But when bad news comes out, the price can drop just as quickly.
- Cybertheft
Bitcoin is digital, and it can be hacked. Because any government or financial institution does not regulate Bitcoin, it leaves investors vulnerable to cyber theft. In January 2014, $450 million worth of bitcoins were stolen from Mt. Gox, a popular bitcoin exchange.
- Fraud
One of the biggest risks of investing in Bitcoin is fraud. Because Bitcoin is such a new investment, many scammers are trying to take advantage of people who don’t know any better. Be very careful when choosing an investment opportunity and do your research before handing over any money.
- Little Or No Regulation
Bitcoin and other cryptocurrencies are decentralized, meaning governments or banks do not regulate them. This can be both a good and bad thing, as it means there is no one to protect investors if things go wrong, but also that there is no central authority controlling the currency.
- Technology Reliance
The underlying technology of Bitcoin is still in its early stages and unproven. As a result, there is a risk that it may not be able to scale to meet the needs of a large number of users. If this happens, investors could lose money as the value of Bitcoin falls.
- Block Withholding
A recent study by researchers from the University of Texas at Austin found that a significant number of Bitcoin miners are withholding blocks. This could lead to a “51% attack” on the Bitcoin network, in which these miners could control the flow of transactions and prevent other miners from validating new blocks.
- Limited Use
Bitcoin is useful for a limited number of transactions compared to traditional currency. One of the key risks of investing in Bitcoin is its limited use. Unlike traditional currency, Bitcoin can only be used for a limited number of purposes, making it less valuable as an investment option.
The Bottom Line
Bitcoin is a new and innovative form of digital currency that carries a high level of risk. As an investor, it is important to be aware of these risks before making any decisions about allocating your hard-earned money to this investment.
