Bitcoin is extremely successful for being the first of the many cryptocurrencies available in today’s heavily digitized world, with over 60,000 alternative variants being churned out over time. The digital currencies’ unique features such as anonymity and security are surely tempting, but are they worth the risk to invest?
First, we need to talk about why Bitcoin is so attractive as a form of currency. Unlike paper money used in the real world, the nature of Bitcoin as computerized means no single bank or institution controls your money because the network is formed through the computers and devices that actually mine the coins. This places some relief in people as it ensures that their money is secure and cannot be tampered with, which is especially understandable as Bitcoin originated off the heels of the 2008 financial crisis. Additionally, it is possible to send and receive Bitcoin without any personally identifying information being given out. With this in mind, Bitcoin would appear to be a pretty secure investment for citizens who are worried about the safety of their finances, because of the reassurance that your money is protected by the decentralized nature of the network.
However, Bitcoin is often called a ‘volatile, dangerous creation’ and is therefore seen as a high-risk investment. This can be defined by a multitude of factors; one of which being the fluctuating, unreliable prices of the cryptocurrencies. When investing in Bitcoin, the number one rule is that it is a speculative investment, so the value of your shares can dramatically decrease at any moment and therefore you can’t really guarantee that you will reach even minimum profitability. On the other end of the scale, you could strike gold with your investment and get a pretty hefty return. You can see why cryptocurrency is such a dangerous game to play; there is no sure-fire way to ensure you get a profit. Some Bitcoin investments may even be a scam! This means that when investing in Bitcoin it is important to never invest more than you can lose, as well as being especially careful in what you trust your money to – it is not a conventional investment after all!
And as with all things on the internet, nothing is ever completely safe. Despite the decentralized network being one of the most popular reasons for investing in Bitcoin, it is understated how easy it is to actually steal. It is not uncommon for Bitcoin investors to be victims of computer viruses and hackers, making security one of the top priorities if you ever decide to venture into the world of cryptocurrency. Thankfully, Bitcoin can actually be secured physically even though it is digital. Offline wallets can be created by installing wallet software on a bootable USB or live CDs to protect your bitcoins in analog forms. Like paper money, it must be kept physically secure, maybe in a safe or even a bank vault as these wallets can easily be lost if not careful.