Since it was released back in 2008 by Satoshi Nakamoto, in ab attempt to provide the people around the world with a decentralized system of currency, Bitcoins have faced a lot of criticisms over the years. But, that does not takes away the fact that people have also shown great deal of interest in cryptocurrency as well. Prices of Bitcoin were well below $200 in 2009 but in 2017, the prices were above $17,000. The market cap of Bitcoins have grown to be around $103 billion and that is phenomenal. Such a huge success of Bitcoins have allowed more traders to invest in this currency. People have used automatische Handelssoftware over the years in order to make some quick money.
However, the prices of Bitcoin have never been free from the significant volatility it is experiencing even now. That is the reason why majority of the world still believes that cryptocurrency is a hoax. A lot of factors contribute to this and with time, experts believe that situation can turn either side.
Is Bitcoin really that dangerous? If so, then what might be the reasons? Well, there are several factors that can determine this statement. Let us have a look at them in the upcoming sections and look into it thoroughly.
Why investing in Bitcoins is a risk?
The moment you are planning to invest in a certain element, it comes with some risk. You will find risk in almost every investment that you may indulge in over the course of your career. Similarly, cryptocurrency also brings a big amount of risk to your table. Here are some very crucial reasons which tells you about the risks.
Extreme levels of volatility – the biggest and most important risk that you will need to worry about is the levels of volatility that is revolving around the cryptocurrency industry. You will need to take high levels of risk if you want to get involved in the market. The entire Bitcoin ecosystem is based on the market price and how well the market is performing. With the presence of pump-and-dump activities going on around the globe, the prices are much more fragile than you may imagine. Since the prices are non-regulatory, as more people enter the markets, prices go up and come down based on their practices that they follow over time.
Neither commodity, nor currency – another big reason why Bitcoins are a great risk when it comes to investing your money, is the factor of clarity. Bitcoin is neither a completed commodity, nor it is a pure form of currency. The overall nature and characteristics of the currency is at a question. Since it is mind with the help of complex mining techniques and process, one cannot call it to be a commodity. At the same time, since the prices are not controlled by the government, it is by default democratic. That is why it does not fall under the currency category.
Unregulated sector – due to the lack of proper regulation and disciplinary board or committee, the idea of investing in Bitcoins tend to scare away a lot of people around the world. There is no group or board of people who are controlling and regulating the prices of Bitcoins over time. It is completely dependent on the current market and the kind of investors present in it. The prices are fluctuating depending on the demand and supply basis and not regulated by anyone.
Various issues regarding legality – even though cryptocurrency and Bitcoins are usable in different countries around the world, a lot of them still does not believes it to be a solid form of currency. Hence, that can be a real risk for anyone to invest in the crypto industry. For example in India, even though the currency is not banned, the government does not recognize the use of the currency within it’s territory. Hence, it can be really confusing and risky for the people to invest in Bitcoins in a serious way.
Presence of Ponzi Schemes – the availability of several Ponzi schemes is making the entire idea of investing in Bitcoins even more risky. People are not willing to lose on their investments. There are several companies which are offering really high returns to their clients in exchange of investing a certain amount of money. Even though, many people have over the years, got back their investments with profits, a lot of them have learnt this the hard way by losing money.
Fraud and security infringements – it has been observed by several experts that over the past decade, there have been several cases when people have suffered from fraud and a lot of other security issue with their investments. The cryptocurrency sector is still unregulated and remains to be free from any regulatory body. That is why a lot of illegal activities do take place here and that makes it more risky for everyone.
Easy to lose – cryptocurrencies are easy to lose because they are stored digitally in a hard disk or in your wallet. This means that if you lose access to your hard disk or if your wallet gets hacked, you’ll forever lose out on your investments. Till date, the amount of losses concurred on Bitcoins have been in billions. If you misplace your password or the key to your wallet, you will be seriously out of luck. That is why Bitcoins are a serious risk for many people.
So, here are the top reasons which tells you why investing in Bitcoins can be a real risk. Make sure to check all the above mentioned points and try to understand whether you will be willing to invest your money inspite of the risks present.
Are Bitcoins Really a Risky Investment?
Yes. Bitcoins are a risky investment. But you need to remember, as we already mentioned, e every investment is a risk. You will need to learn to mitigate that risk. Bitcoins have several reasons that can justify the fear of the people for not investing in the market. However, you must also need to see how well the prices have gone over time and there is always a scope of making big profits in a short span of time. The risk is much more controlled and lesser for those who are planning to remain invested for long term.
Prices are hovering around $7500 currently and experts believe that after the Halvening Event in 2020, the prices will be impacted severely. Now, this can go either against the market or for it. With the risks we have mentioned in the previous section clearly tells you why investing in Bitcoins is a real risk. However, if you are knowledgeable, skilled enough and have the potential to make the most out of the market, then Bitcoins can be a good investment idea.
Final Words – if you are planning to invest in Bitcoins, you can get hold of a reliable automatische Handelssoftware and invest safely in the market. But make sure that you have backed up your investments with high level of security, Digital backup and other resources which will keep your investments safe over time. Learn and read more about the markets before you finally decide whether you want to invest or not.
Jane Castro is a journalist and media enthusiast. She graduated from the University of Bacolod in the Philippines. She loves skating, scuba diving, and archery on her free time.