Cryptocurrency technology have really advanced since the past decades.
These advancements have also brought fought some more risks, alongside the benefits it was intended.
Cryptocurrency is one of the technology that has come to replace traditional currencies, just like some other digital cryptocurrencies.
Along the line, it also brought its own set of risks in the scene.
Before you start debating it with me already, just know that, because there’s a new currency out there does not mean it’s infallible.
Although designed to be more secure through encryption, there are still risks of using the crypto technology.
Without wasting much of your time, let’s discuss the cryptocurrency investment risk you could face as a beginner.
Shall we…?
1. Value fluctuation
Using cryptocurrency such as Bitcoin to purchase goods and services comes with certain amount of risk.
Since its inception, it has gone from zero to nearly $20,000 for a single Bitcoin in December 2017.
However, the value currently places it at over $6K per Bitcoin, which is even marked as decrease from the all-time-high.
However, this changes in price will always happen, but the problem is that these wild changes in crypto valuation increase the usage risks.
Furthermore, if values rally and rise later it could leave you with buyer’s remorse and huge losses.
2. Global adoption
Businesses fear accepting cryptocurrency as mode of payment, due to the high volatile changes in the valuation.
This makes them reluctant to accept it as a form of payment.
If you try to pay for your online purchases strictly with cryptocurrency, you could end up paying very high amount with some of the businesses.
It appears some foreign countries also have a lack of acceptance, and not all of them recognize digital currency as a form of payment.
3. Stuck transaction
We transpose numbers, record them wrong, while making some other errors that are sometimes caught, and sometimes not.
What if an exchange is taking place and the wrong cryptocurrency wallet address is entered?
You could lose thousands if not tens of thousands or more.
Clearly, protecting your investment is extremely important using safety measures to reduce the likelihood of some errors.
4. Hacking and theft
Even with encryption to protect cryptocurrency transactions there have been hacks resulting in substantial losses.
Passwords can be stolen or hacked. Hardware can be corrupted or taken. Others you do business with could be lax in their security.
This could result in loss of your cryptocurrency during a transaction, as thieves can gain access to your digital currency.
Clearly, as a new form of currency, it still has some kinks to work through.
However, it is possible to minimize some of these risks by using reliable Virtual Private Networks (VPN) with proper precautions.
Cryptocurrency investment risks
Cryptocurrencies are an emerging market, and the future of crypto investment will definitely unfold in many different ways.
It remains to be seen how this market will evolve, and whether cryptocurrencies will become mainstream, or relegated to certain niches.
If traditional financial institutions join this space, they should apply sound risk management practices with respect to financial, technological and emerging market risk.
