Bitcoins has gained a lot of popularity through several social media channels. Take the tweets from Elon Musk, for example at this link. With one tweet, he was able to allure a huge mass into investing. Another such example would be an NFL player who took his entire salary in Bitcoins. Companies like DELL and Microsoft are also looking to invest in Bitcoins.
But aside from this, when we take a very close look, then Bitcoins investments are also very volatile. So it is not always wise to invest all your fiat money into cryptocurrency. In most cases, it is advised to invest 10%-30% of total income or savings.
It is a very profitable market which can give high profits but, at the same time extremely volatile and can result in losing it all. So, to understand these risks better, here are a few top risks involved with investing in Bitcoins. But first of all, before you invest, you need to check the system and how it is working, if you want to reap the benefits from your investment.
Top risks of investing in Bitcoins
1. It is not real money
Aside from all its popularity, Bitcoins is not backed by any value. Aside from that, it has no real-world value. It is not centralized, and neither is it backed by any government body.
This implies the government is not exactly helping in making Bitcoins valuable. As per Warren Buffet, “Bitcoins has no unique value”. This sentence says it all. Bitcoins is worthy of investment as long as its investors, or we think it is valuable. The moment we stop thinking that Bitcoins has lost all its value. This makes Bitcoins extremely volatile.
3. Bitcoins is even less hazard proof
With the recent pandemic, it is more than clear that we need physical assets more than digital assets. Now think, if ever there was a collapse in technology and we lose all our electricity grids and the entire internet system, then how you will access your Bitcoins or any cryptocurrency.
This pandemic made this even more plausible discussion and worthy of giving a thought than ever before. As in scenarios where fiat money fails, the government and central banks will back that money with assets such as gold and silver.
3. Cybertheft and other security risks
As Bitcoins are entirely based in the digital world, the chances of losing it all to hackers are extremely high. Sometimes exchanges are hacked, and other times you make an exchange with a fraudulent body. Along with the trends of cybertheft, there can also be the risk of losing private key or your password, that can actually lead to a larger intensity of cybertheft.
There is also a chance of losing the key to your digital wallet. Once lost, your entire Bitcoins can never be retrieved back. Hence it is advisable to choose a safe and secure platform like Bitcoins exchanges, so you are not vulnerable to cyber-attacks or cyber thefts.
Is investing in Bitcoins worth it?
In the end, it depends upon individuals and what they are willing to risk. New regulations are coming every day, and there are also high profits that can be earned through Bitcoins. But there are also risks and chances of losing it all. There are various ways you can get your Bitcoins or cryptocurrency, like through trading, converting fiat money into cryptocurrency and much more.
But all that hard-earned money can be lost in a fraction of a second if you are not careful with the Bitcoins and security of your wallet. This is the only reason why the Bitcoin specialists guide you on not to scatter or concentrate all your hard-earned asset only on one digital platform. There might be a risk of bankruptcy when you suffer a sudden loss.
Conclusion
In the era of technology and the meta-universe, it is difficult to imagine what life would be without technology. But there are always chances of mass collapses in technology. So if you are planning to invest in cryptocurrency or Bitcoins, then do not just look at the profits but also keep an eye on the risks. Bitcoins investment is a new and growing market which can give high profits but at high risks.
