Bitcoin Risks

Bitcoin Risks Investors Should Be Aware Of

Risk one: bitcoin instability

Everyone knows how volatile bitcoin is, and those who invest in it will see that the value of this cryptocurrency fluctuates sharply. Unless you can overcome the ups and downs of bitcoin, investing in bitcoin is not for you. There is little to be gained if losing your capital will lead to your sleep deprivation. I can not stress enough the need to spend money at your discretion to play the cryptocurrency market.

What are the discretionary costs?

It’s money spent on travel, food, entertainment, hobbies and sports.

You would never spend your rent or retirement money on entertainment such as racing one day, so you should not use that money to play in the cryptocurrency market either.

Dual hacker risk

A company called Cryptopia, which was an online trading platform for bitcoin, held assets invested in bitcoin. It broke, և all those who invested in bitcoin with cryptocurrency lost their money. There were some sad stories about the big money lost by some. individuals.

It should be reiterated that you should never make money in cryptocurrency with funds that you can not afford to lose or put too many eggs in one basket, as many of these investors seem to have done.

The other thing I have to add is that the real money lost by cryptocurrency investors is likely to be grossly inflated due to the rise in bitcoin prices. If someone invested $ 1,000 in Bitcoin, ում in a few years it would reach $ 10,000, only he would lose the lot. It will be recorded that this person lost 10 thousand, when in fact they lost only 1 thousand.

Risk of three lost passwords

The Australian man was locked in his bitcoin wallet because he could not even remember his password. The site where he has his bitcoin will lock him out of his wallet forever if he makes ten unsuccessful login attempts. He made eight. He has more than 300 thousand in his bitcoin wallet.

The lesson here is to write down your password և keep it in a safe place.

Another tip is to diversify your portfolio so that if something goes terribly wrong, you do not lose much in one fell swoop.

Four government controls of risk

Governments have the opportunity to ban cryptocurrency trading. China has done just that. In China, several agencies have joined forces to ban what they describe as “illegal” cryptocurrency operations. This does not mean that other countries will follow suit, but it simply shows that governments really have the right to do so.

Risk Five – Taxation

Two things are certain in life: death և taxes. You can be sure that at some point the taxman will want a piece of your bitcoin pie. Be it in the form of a capital gains tax or in the form of bitcoin value added. It should be borne in mind that if you are taxed on your bitcoin capital gains, it may be possible to repay any tax on any loss of capital. A good accountant will advise you here.

Whatever form of capital gains you invest in, you should always remember that when there is an opportunity for capital gains, there is also the potential for loss of capital. Investing in cryptocurrency is risky, so it’s not enough to stress that the amount you invest in bitcoin should be the amount you can afford to lose.

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