Virtual currency or cryptocurrency sounds like the future currency that might take the fiat currency in the future. Trading goods and services will be as simple as clicking a button.
And if we are talking about the cryptocurrency, Bitcoin is by far the most successful cryptocurrency. Even after being in the market for over a decade, it still has to find a relevant market regulation. Even though the Bitcoin regulation is not as smooth as the fiat currency, people are still using it to avail of its advantages over the fiat currency.
Despite being one of the most popular cryptocurrencies globally and having several advantages over the fiat currency, it still lacks in many fields. Some severe risks come with cryptocurrency investment.
Risk of investing in Bitcoin
Seeing how so many traders and investors are rushing towards the cryptocurrency without knowing the risks of the cryptocurrency investment, I thought of providing some eye-opener tips for them.
1. Volatility
Volatility has always been a major concern in the crypto trade market. The price fluctuation is highly volatile, and it becomes tough to predict the market's flow. Hence, it is essential to get through the market regularly to have a clear understanding.
2. Fraud
The cryptocurrency trade market is prone to fraudulent activity. If you are not conscious about your surroundings, then there is a high possibility that your crypto wallet will be hacked. To make sure that doesn't happen, you can use secure platforms like coinbase, Crypto Software, and Kraken.
3. No regulation
Currently, the market of the cryptocurrency is surviving on bare minimum regulation. Governments have not accepted the use of the cryptocurrency with legal means. Hence, the investors and traders who invest in the cryptocurrency are doing so with their risks. This lack of regulation makes it hard for traders to use it for other purposes. Investing in Bitcoin is more accessible than liquifying them.
4. Technology reliance
Bitcoin is directly dependent on the technology. Hence, if there is no electronic device and internet of things, the bitcoin blockchain network has never existed.
5. Block withholding
There is only one way to create new Bitcoin, and that is by Mining. Mining can be done by solving complex mathematical equations called "Blocks." A mining pool can use the latest technology to hide the mining process from the honest miners and thereby reducing their profit. It is quite common in a mining pool method.
6. Finance loss
Bitcoin has always been considered as a currency used for illicit purposes. And some people even consider bitcoin as a bubble economy. The value of the Bitcoin depends on the holding of the crypto token. So, there are times when the Bitcoin owner has to sell at the same price they have bought. Hence, in a way, it is close to financial loss.
7. Limited use
A cryptocurrency is a digital form of currency. Still, the cryptocurrency usage is limited by comparing the cryptocurrency with physical assets like stocks, shares, and funds. And to add some extra screw to the limited use, some companies do not even consider cryptocurrency as currency.
8. Investing opportunities
You may find that Bitcoin has provided trades and investors with an infinite number of investment opportunities. It might sound great. By the moment you realize that there is no worldly element to back the cryptocurrency value, it becomes hard to believe in the cryptocurrency. Currently, cryptocurrency can hold its deal with the trust people have shown. What will happen if the trust is broken?
9. Young technology
A very young technology, Blockchain power Bitcoin. It has not been even 11 years since the introduction of this technology. Despite being a young technology, this technology has seen several changes in the past decade, and you can expect to see several changes i9n the future as well. This technology is still in its first phase and is unstable.
Conclusion
The Crypto trade market is profitable. However, it is also the riskiest trade market. So before entering into the crypto trade market, it is essential to know what risks are involved.
* This is a contributed article and this content does not necessarily represent the views of realtytoday.com
