Business

How You Could Get Crushed By Bitcoin

Anyone who invested in cryptocurrencies three years must have made a fortune running into millions of dollars by the end last year.  Bitcoin, in particular, caused a frenzy, especially when it became evident that businesses and institutions were already accepting it as a mode of payment.

[REITs]

Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital

 

stevepb / Pixabay

However, claims of governments working in cahoots with banks in a bid to scuttle the rising popularity of virtual currency because they think it is a threat to not just hard currency but also world economy raised more questions than answers. And so for the crypto investor, the question is, whether the sudden interests from governments and reluctance by money regulatory authorities to authorize Blockchain investment into the mainstream economy is something to worry investors.

Any investment is worth the risk

Another question you need to ask is, what are the risks involved?  While an experienced crypto miner may have learned the ropes of, what about crypto newbies who are still learning the basics such as what is Bitcoin mining? Is there any chance that he or he could get crushed before reaping anything out of say, a hundred dollars worth of investment on the lower end?

Well, the truth is that every investment could either end up in losses or profits, in which case, you must be prepared to accept any outcome. People who trade Bitcoin in Binary Options could perhaps be labeled as some of the biggest risk takers here, but that doesn’t mean that a crypto miner is scared of getting crushed when things go south.

It’s not money in Bank

There is a number of online trading and money transfer platforms that are already accepting payment in Bitcoin. And even though their actions may have come as a new lease of life to crypto traders, the last one or so year has remained unpredictable for those presumed things will get better by the day.  In particular, the months of February and March presented miners with a real test as Bitcoin value plummeted leaving investors shocked to the bone marrow.

Over $100 billion U.S dollars in crypto value was wiped off the stock markets and since then, everyone who wants to start mining Bitcoin takes a safe stance even as they watch their investments grow, albeit, with fear of the unknown.

How you could get whipped

The point here is not to discourage anyone from putting their money in crypto trade but a warning shot that everything is not rosy. It is an open secret that investors know. Here are a few red flags in Blockchain that everyone should keep tabs on.

Highly Volatile

There is enough proof already that Bitcoin is very volatile. By December last year, its value was pegged at $20k. However recent price fluctuations are a pointer to a future that is largely unforeseeable regarding crypto options and futures in the stock exchange. At one point, the value of Bitcoin plummeted to $7614 and that alone makes investors fret at the thought of having their long-term goals tied to Blockchain.

The threat of hacking

Storage of Bitcoin takes place in computer hard drives and in online safes connected to servers of a trading platform.  It means miners must invest in impenetrable security layers if they want to wake up to another day of making money in Blockchain. From having a strong computer password to acquiring protection from trusted third security software vendors, the threat of losing everything to hackers is something you should never rule out.

ICOs has no value

ICOs refer to initial coin offer. Now, as opposed to Initial Public Offer that companies provide to investors in a bid to raise capital when they go public, ICOs involves the selling of token. According to North American Securities Administration Association (NASAA), ICOs has no significant value to an investor. It is those who sell the tokens that benefit and not the buyer because the former may be doing it to raise money for funding a Blockchain project.

Lack of mainstream regulation

The value of money market does not only thrive on buying and selling but also on regulation by The Federal Reserve. Further, lack of insurance by bodies like Federal Deposit Insurance Corporation puts Blockchain on the precipice should the value of Bitcoin plummet to irredeemable levels. Cyber insecurities and threats of hacking could very well make that fear come alive.

The Bottom Line

In a nutshell, while those who invested in Bitcoin sometimes back in 2016 may have made profits by up to 800%, there is no safe landing pad when its value falls to all-tight low thus amounting to huge losses. It is imperative to know it is safe to invest in cryptocurrencies. The challenge is further compounded by lack of approval for listing in the stock market, something which continues to make ICOs valueless. Never throw caution to the wind when you opt to invest in Blockchain.


About the Author

Beverly Lerch is an investment manager from a small financial company also involved in financial consulting on several educational websites including MyHomeworkDone.com. She takes an in-depth, hands-on approach to deliver engaging, informative texts.

macroeconomics, he became more interested in cryptocurrencies.