The Top Risks of Investing in Cryptocurrencies
Bitcoin is now on the radar of the investing populace. More and more investors are finding ways to integrate bitcoin investments to their portfolios, and they are not wrong to do that.
However, one must still be careful of the things that may come along with the rapid acceptance of bitcoin in the investing world.
Here are some of the biggest risks of investing in bitcoin right now.
If you have been following the news closely, you know that volatility is a permanence in bitcoin investment.
Prices change quickly and the market often goes back and forth. Put simply, it’s still a very unpredictable market. There really isn’t any guarantee right now that you can get a return on your investment.
Hacking and Cybertheft
And since we’re already living in a digital world, the threat of hacking is very real. Cyberattacks are not very uncommon these days.
And because bitcoin and cryptocurrencies in general are based on technology, they are a hot tip for hackers and cybercriminals.
What’s worse is that when you become a victim of a hacker, and the hacker gets your money, there really isn’t any way to retrieve and have it back.
According to surveys, bitcoin traders and investors will more often lose their investments on exchanges, which are a favorite for hackers.
Apart from the threat of hacking, fraud and scams also exist in the digital currency space. Because bitcoin and cryptocurrencies are in demand, fake exchanges pop out in the market like mushrooms.
The Securities and Exchange Commission has already issued a warning against these fraudulent entities. However, the lack of security still looms large over investors of the asset.
Although the cryptocurrency space has developed advanced ways to prevent such fake exchanges and scammers, these fraudsters still exist.
Bitcoin and the underpinning technology called blockchain are disruptive and innovative. There’s no question about that.
However, cryptocurrencies still have limited use around the world. Although more and more companies and institutions are exploring the capabilities of such tech, we’re virtually still a long way from adopting bitcoin and cryptocurrencies in more modes of exchange.
There are still more companies that don’t accept or recognize bitcoin as a legitimate mode of payment or store of value than those who do.
Investors view bitcoin and cryptocurrencies in two different ways: as currency and as investment asset.
To make that clear, some investors treat bitcoin like currencies that they can use buy something. The difference is that it’s digital and it still doesn’t get the universal recognition as a currency.
On the other hand, other investors treat it like an asset which they only want to see appreciate. It can then be compared to stocks or properties which they buy with the hopes of selling them for a higher price sometime in the future.
With this apparent disconnect among crypto investors, bitcoin and cryptocurrencies’ direction and future become even harder to pin down.
Therefore, investing in it may mean a lot of risks to an investor.